Model documentation and user instructions
PERSUADE – CBA tool
for economic appraisal
Vejdirektoratet,
Rapport 441, 2013
PERSUADE – CBA tool
for economic appraisal
Model documentation and user instructions
Author:
FOTOS:
Mads Paabøl Jensen, COWI and Gilles Pigasse,
The Danish Road Directorate
The Danish Road Directorate
ISBN (NET):
DATE:
978-87-70607-70-4
June 2013
COPYRIGHT:
LAYOUT:
The Danish Road Directorate
2
The Danish Road Directorate 2013
Preface
This report is the technical documentation for the CBA model used in the
initial cost benefit analysis of poroelastic road pavements. The report is
produced as a part of the PERSUADE
project a research project under EC
DG Research’s Seventh Framework
Programme. The PERSUADE project
aims at developing the experimental
concept of a poroelastic road surfacing
(PERS) into a feasible noise-abatement measure as an alternative to, for
example, noise barriers. It is expected
that PERS may provide substantially
higher noise reductions than the best
of the conventional paving materials.
The specific feature of this new type of
road surfacing is that it consists mainly
of rubber granules from recycled car
tyres bound with a synthetic resin,
such as polyurethane.
PERSUADE is the acronym for PoroElastic Road SUrface: an innovation to
Avoid Damages to the Environment.
The project programme comprises an
extensive investigation in the laboratory to develop a durable mixture, the
construction of seven test sections in
five partner countries, a monitoring effort for the test sections (noise, rolling
resistance, skid resistance, durability,
winter behaviour, etc), and a study
of all conceivable environmental and
socio-economic aspects. The project, which started in 2009 has been
scheduled for a duration of six years.
Twelve partners from seven European countries are cooperating in this
project, including research institutes,
universities and companies representing the involved industry sectors.
Building and Civil Engineering Institute
(ZAG), the Polish Road and Bridge Research Institute (IBDiM), the Swedish
Road and Transport Research Institute
(VTI) and Danish Road Directorate
(DRD) (leader of WP7). All partners
have provided data about the possible
case location for PERS. The Danish
Road Directorate has subcontracted
the Danish consulting company COWI
for the development of the model used
for the CBA. COWI has also provided
the present technical documentation.
Further information on PERSUADE
can be found at the website of the
project at http://persuade.fehrl.org/
The report is drafted by Mads Paabøl
Jensen (COWI) and Gilles Pigasse
(Danish Road Directorate) and has
been reviewed by the project group.
The authors are grateful for the financial support of the major part of this
project from the European Commission
though its 7th Framework Programme.
The partners of the project have also
contributed financially to the project.
This report/deliverable is produced
within Work Package WP 7 in the
project, which deals with ”Cost-Benefit
Analysis” and is led by the Danish
Road Directorate (DRD). This report
is the technical documentation for the
CBA model used in PERSUADE.
The partners involved in the WP7 are
the Belgian Road Research Centre (BRRC), the Slovenian National
3
Forord
Denne rapport er den tekniske dokumentation for CBA-modellen anvendt
i den første cost-benefit-analyse af
poroelastiske vejbelægninger. Rapporten er udarbejdet som en del af PERSUADE projektet, et forskningsprojekt
under EU´s syvende rammeprogram.
PERSUADE projektet sigter på at
udvikle poroelastiske vejbelægninger
(PERS) med størst mulig støjreduktion.
Det forventes, at PERS belægninger
kan give væsentlig højere støjreduktioner end de bedste af de konventionelle
vejbelægningmaterialer. Det særlige
ved denne nye type vejbelægning er,
at den hovedsageligt består af gummigranulat fra genanvendte bildæk
med et syntetisk harpiks bindemiddel,
såsom polyurethan.
for at udvikle en holdbar belægning,
etablering af syv forsøgstrækninger
i fem partnerlande, et måle og overvågningsprogram for forsøgstrækningerne (støj, rullemodstand, friktion,
holdbarhed, vinteradfærd, osv.), og
en undersøgelse af mange miljømæssige og socio-økonomiske aspekter.
Projektet, som startede i 2009 har en
varighed på seks år. Tolv partnere fra
syv europæiske lande samarbejder i
dette projekt, herunder forskningsinstitutter, universiteter og virksomheder,
der repræsenterer de involverede
brancher.
PERSUADE er en forkortelse for PoroElastic Road SUrface: an innovation
to Avoid Damages to the Environment.
Projektets program består af omfattende undersøgelser i laboratoriet
Denne rapport er produceret inden for
arbejdsgruppe 7 (WP 7) i projektet, der
omhandler ”Cost-benefit-analyse” og
er ledet af Vejdirektoratet. Denne rapport indeholder den tekniske dokumen-
4
Yderligere oplysninger om PERSUADE kan findes på hjemmesiden for
projektet på http://persuade.fehrl.org/
tation for CBA-model, der anvendes i
PERSUADE.
De partnere, der er involveret i WP7 er
det belgiske Road Research Centre (BRRC), det slovenske National
Building og Civil Engineering Institute
(ZAG), den polske vej og bro Research
Institute (IBDiM), den svenske Road
og Transport Research Institute (VTI)
og Vejdirektoratet (VD) (leder af WP7).
Alle partnere har leveret data. Det
danske konsulentfirma COWI har stået
for udviklingen af ​​den anvendte CBA
model. COWI har ligeledes udarbejdet
denne tekniske dokumentation.
Rapporten er udarbejdet af Mads
Paabøl Jensen (COWI) og Gilles
Pigasse (VD) og er blevet gennemgået
af projektgruppen. Forfatterne vil gerne
takke EU for den finansielle støtte til
dette projekt. Projektets partnerne har
også bidraget økonomisk til projektet.
Content
Preface3
Forord4
Content5
SUMMARY7
Sammenfatning8
1. Introduction
1.1 Background
1.2 Purpose
1.3 Content
9
9
10
10
2. Methodology and approach
2.1 Framework conditions
2.2 Work process
2.3 The general CBA methodology
2.3.1 The CBA framework and technique
2.3.2 Valuation of noise
2.3.3 Other externalities in relation to noise mitigation
2.4 Concept and approach
2.4.1 Five cases – results for selected case
2.4.2 Specific and general assumptions
2.4.3 Included effects
2.4.4 Both cost-benefit and cost-effectiveness results
2.4.5 Sensitivity analyses
2.4.6 Critical parameter analysis
11
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12
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15
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3. The PERSUADE CBA tool
3.1 Introduction and content
3.2 Key assumptions and parameters
3.2.1 Noise costs
3.2.2 External costs
3.3 Input data
3.3.1 Case input data
3.3.2 Costs of Surfaces
3.3.3 Noise reduction effects
3.4 Output and results
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5
6
4. User instructions
4.1 General principles
4.2 Operating the model
4.2.1 Conducting sensitivity analyses
4.2.2 Conducting critical parameter analyses
4.2.3 Conducting scenario analyses
4.3 Updating and adding data
4.4 Epilogue
23
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25
25
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25
26
5. Outlook and recommendations
5.1 Uncertainties and limitations
5.2 Development perspectives
5.3 Concluding remarks
27
27
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28
6. References
29
SUMMARY
The purpose of the project is to investigate the socio-economic efficiency of
PERS compared to conventional road
surfaces and other noise mitigation
measures. This report is the technical documentation for the CBA model
used in the initial cost benefit analysis.
It should be considered as the secondary report to the deliverable WP7-D7.1.
This report presents the methodology
and the approach used during the costbenefit analysis (CBA). It also gives
detailed information about the tool that
has been used. The core of the CBA is
an Excel spreadsheet and this report
helps understanding how this tool has
been built and how users should manipulate it in order to run a CBA.
This report concludes on some recommendation and limitations of the
model.
7
Sammenfatning
Formålet med projektet er at undersøge det socio-økonomiske effekt af
poroelastiske vejbelægninger (PERS)
i forhold til konventionelle støjreducerende vejbelægninger og andre støjbegrænsende foranstaltninger. Rapporten er den tekniske dokumentation
for den model, der blev anvendt i den
første cost-benefit-analyse, og udgør
den anden del af slutrapporteringen af
delprojekt WP7-D7.1.
Rapporten præsenterer den metode
og fremgangsmåde, der blev anvendt i
8
cost-benefit analysen (CBA). Den giver
også detaljerede oplysninger om det
”værktøj”, der er blevet brugt. Kernen
i CBA-modellen er et Excel-regneark,
og rapporten gennemgår, hvordan
dette værktøj er bygget op og hvordan
brugerne kan anvende det til at udføre
en CBA.
I rapporten angives endelig anbefalinger og begrænsninger af modellen.
1. Introduction
This report provides the technical documentation and user instructions for
the Cost-benefit Analysis tool prepared
for analysis and appraisal of Poro
Elastic Road Surfaces (PERSUADE).
The report has been prepared by DRD
and COWI under WP7 of the PERSUADE project.
This documentation report supplements the specific and detailed documentation included in the developed
Cost-Benefit Analysis (CBA) tool (an
Excel model). The PERSUADE Cost
Benefit tool can be found on the homepage of the PERSUADE project. Not
all information included in the model
is reproduced in this report and the
model constitutes the most important
part of the documentation.
It should be noted that this documentation has been prepared by the end
of ”an initial phase” of the project. At
this stage, the overall structure of the
model and all fundamental features
and functionalities of the model are in
place. It is however anticipated that the
model will be further developed in the
final stage of the project. An updated
version of this documentation will be
prepared when a final version of the
model has been developed.
For more information on the results of
the initial phase cost-benefit analysis
carried out with the tool readers are
referred to the PERSUADE project
deliverable “WP7 - Costs-benefit of
PERS” Danish Road Directorate,
2011.
1.1 Background
The PERSUADE project is a research
project under EC DG Research’s
Seventh Framework Programme Theme ENV.2008.3.1.5.1 - Innovative
environmental technologies including
design concepts and materials for the
reduction of damage to the environment. PERSUADE is the acronym for
PoroElastic Road SUrface: an innovation to Avoid Damages to the Environment.
The PERSUADE project aims at developing the experimental concept of a
poroelastic road surfacing (PERS) into
a feasible noise-abatement measure
as an alternative to, for example, noise
barriers. It is expected that PERS may
provide substantially higher noise
reductions than the best of the conventional paving materials. The specific
feature of this new type of road surfacing is that it consists mainly of rubber
granules from recycled car tyres bound
with a synthetic resin, such as polyurethane.
The project programme comprises an
extensive investigation in the laboratory to develop a durable mixture, the
construction of seven test sections in
five partner countries, a monitoring effort for the test sections (noise, rolling
resistance, skid resistance, durability,
winter behaviour, etc), and a study of
all conceivable environmental and economic aspects. The project has been
scheduled for a duration of six years.
Twelve partners from seven European countries are cooperating in this
project, including research institutes,
universities and companies representing the involved industry sectors.
See further the PERSUADE homepage at http://persuade.fehrl.org/
This report/deliverable is produced
within Work Package WP 7 in the
project, which deals with ”Cost-Benefit
9
Analysis” and is led by Danish Road
Directorate (DRD).
To facilitate the analyses a cost-benefit
tool has been developed.
The overall objective of WP 7 is to
appraise the economic efficiency of
PERS in comparison with conventional
surfaces and in comparison to other
noise mitigation measures. A cost-benefit analysis should be performed as
an initial analysis and a final analysis.
1.2 Purpose
The initial analysis should provide a
complete theoretical evaluation of the
potential and limitations of the technology and outline the most critical parameters from the best possible estimate
of all influential parameters. The final
analysis should provide a full evaluation
of economic efficiency of PERS based
on the mix optimization and experiences from the test sections and provide a
guideline for possible efforts for improving the cost efficiency of PERS.
10
The purpose of this report is to provide
a technical documentation of the
Cost-benefit analysis tool which has
been prepared as part of WP7. The
methodological framework should be
explained with specific focus on CBA
in relation to PERS. Finally, the report
should serve to provide instruction
on how to use the model and how to
interpret results.
1.3 Content
The report is structured as follows:
Chapter 2 gives a short description
of the work process and approach
used for developing the CBA tool. This
includes a short general introduction to
the CBA methodology.
Chapter 3 presents and describes the
content of the model. Key assumptions
used are presented and input data and
outputs are briefly characterised.
Chapter 4 provides specific user
instructions on how to operate the
models and how to update them with
new and additional data.
Finally, chapter 5 describes uncertainties and limitations of the model and
briefly outlines the next steps in the
development process. Further, it provides recommendations for areas that
could be subject for further analyses in
the future.
2. Methodology and
approach
This section first describes the overall
framework conditions of the model
development and the work process.
This is followed by a short general
introduction to the CBA methodology
and finally the overall approach used
in the model is presented.
2.1 Framework conditions
The overall objective of WP7 is clear.
The economic efficiency of PERS
should be appraised by carrying out
cost-benefit analysis. However, cost
benefit analysis should be performed
both at an initial stage and a final stage.
At the initial stage the analysis should
provide a complete theoretical evaluation of the potential and limitations
of the technology and outline the
most critical parameters from the best
possible estimate of all influential
parameters. Thus it must be analysed
how much cost of PERS should be
reduced, lifetime increased or environmental impacts reduced to obtain a
positive current net value of PERS as
a noise mitigation measure. The idea
is that this information - at an early
stage of the project - could help focus
the tasks in other work packages and
target the work.
To facilitate the analyses a cost-benefit
tool is developed. The CBA tool is
used both in the initial and final stage.
However, the model does not need to
be fully developed at the initial stage.
Values can be preliminary or missing
but the model needs to be in a condi-
tion to support analyses of the most
critical parameters.
2.2 Work process
The development of the PERSUADE
CBA tool has been carried out by Danish Road Directorate/COWI in close
cooperation with the PERSUADE
partners. The partners also involved
in WP7 are BRRC in Belgium, ZAG in
Slovenia, IBDiM in Poland, VTI in Sweden. The Partners have contributed
with data and information and valuable comments and suggestions. The
model includes five cases calculation
reflecting different roads, traffic intensities and locations. The Partners have
provided the data about the cases.
The development of the PERSUADE
CBA model has been developed in a
number of steps:
▪▪
▪▪
▪▪
▪▪
Approach, methodology and delimitation of model
Specification of cases and data
collection
Data analysis and model building
Testing and revision of the model
First, the overall approach, methodology and delimitation of model
was discussed and decided before
commencement of data collection.
Then cases were specified and data
collected via the PERSUADE partners.
The model was developed around the
cases and general data about costs of
surfaces, the noise costs, other external cost etc.
This documentation has been prepared by the end of the first phase of
the project. At this stage the model
is not finalised as there are values
missing in the model and thus impacts
that are not yet quantified and included
in the analysis. Further, there is still
limited knowledge about the performance of the PERS including the cost
of the surface, durability and lifetime
and the need for maintenance. As a
consequence there are considerable
uncertainties associated to the data
currently in the model. However, the
overall structure of the model is final
and all fundamental features and functionalities of the model are in place.
The model has been developed
specifically for the PERSUADE project
and the objective of WP7. However,
it should be noted that the development of the model has drawn upon the
output of the SILVIA project.
SILVIA (Sustainable Road Surfaces
for Traffic Noise Control) is an EC research project under the Fifth Framework Programme that was finalised in
2005 (http://www.trl.co.uk/silvia/). The
overall objective of the study was to
provide decision-makers with a tool
allowing them to rationally plan traffic
noise control measures, including lownoise road surfaces. Guidance and
advice was developed including a tool
for cost-benefit analysis.
The SILVIA CBA tool has served as
inspiration for the development of the
11
PERSUADE CBA tool. The fundamental principles in the two models
are similar but since the PERSUADE
model has been tailor-made to serve
to purpose of this specific project there
are differences in the input data used
in the calculation and in the types of
results presented. To some extent this
documentation report also draws on
the documentation of the cost-benefit
analysis of the Silvia project.
2.3 The general CBA methodology
The developed PERSUADE calculation tool relies on standard cost-benefit
analysis methodology. The costs benefit analysis is an economic technique for
the appraisal of projects and policies.
The use of CBA is an integrated part
of the decision-making process in the
European Union aiming to better inform
decision-makers in their decision on
new policies, projects and regulations.
In this section the concept of CBA is
briefly described relating it to the developed PERSUADE calculation tool.
The description aims to shed light
on the overall principles of economic
analysis and to illustrate the usefulness in relation to project appraisal.
However, it is merely an overall
description and it does not attempt to
provide a complete introduction and
overview of CBA. For more information
on the CBA methodology readers are
referred to ”Guide to Cost Benefit
Analysis of Investment Projects”,
published by the European Union in
July 2008. This guideline has been
used as the methodological framework
for the cost-benefit analysis carried out
in this project and also implemented in
the PERSUADE calculation tool.
2.3.1 The CBA framework and
technique
A costs benefit analysis is used to
determine whether a plan is expected
to turn out positively or negatively. The
CBA can be applied on many problems
but in relation to public decision making is applied to projects and policies.
CBA is based on the principle of social
efficiency. Thus, it is concerned with
maximisation of the welfare of the
society as a whole.
The CBA framework provides a useful
tool as it facilitates overall appraisal
and comparison of alternative project
options. It provides valuable information for proper decision and policy
making as it weighs together all costs
and (social) benefits of a project
consistently. The cost-benefit analysis
relies on the addition of all factors positive or negative - to determine a
net result.
Before evaluating projects or a policy
it is important to establish a reference
scenario to which a policy or project
is compared. The reference scenario
should reflect the likely situation without the project or policy being implemented, thus often reflecting a business as usual situation. Now to carry
out a CBA for a project or a policy the
steps to undertake are:
▪▪
▪▪
▪▪
▪▪
▪▪
▪▪
Identification of impacts.
Physical quantification.
Valuation of impacts.
Calculation of net present value
(discounting) and internal rate of
return.
Assess results including assessment of non-monetised effects.
Ideally a sensitivity analysis.
The impacts should include all internal
project benefits and costs (investment
cost, operating and maintenance cost
and revenues) as well as all externalities1 (external cost and benefits) such
as air and water emissions, noise,
accidents etc.
All effects should be expressed in
monetised terms. Valuation of environmental goods and other effects that
do not have an observable price in the
market is in any case essential for the
execution of a CBA.
To weigh together all the effects it is
important to take account of the time
aspect. This means that all costs and
benefits should be discounted adjusting for the time value of money. In this
way the flows of costs and benefits
over time are expressed on a common
basis in terms of their present value.
The total result is now calculated
as the sum of all cost and benefits
expressed in present value to give the
net present value. Instead of calculating net present value all effects
could be calculated as yearly values
expressed in a common year. This
involves annualising the investments.
This approach is used in the PERSUADE model as it is most suitable to
the specific challenge.
In a perfect world with perfect information, prioritising becomes a trivial task
of comparing the net result of the different options. In this respect, the CBA
is merely a tool, which judges projects
according to a simple comparison
between the complete range of costs
and benefits. Welfare economists
use CBA with the aim of maximising
individual and social welfare through
1 Externalities are defined as: “The costs and benefits which arise when the social or economic activities of one group of people have an impact on another, and when the first group fail to fully account for
their impact.” (ExternE 1995).
12
optimal resource allocation. Therefore
the CBA is very well suited to support
decisions in relation to policy or project
assessment.
In relation to the PERSUADE project
CBA is used to appraise the performance of the PERSUADE surface in
comparison to a reference project.
However, it is also used to identify
parameters critical for the economic
performance of PERSUADE.
Some limitations of the CBA
It is important to notice that there are
limitations to the cost-benefit analysis.
First of all it is difficult or not possible
to establish the economic value of
some effects. For many types of environmental ”goods” (e.g. clean air) there
are simply no markets and no observable price, so economists have to resort
to other methods to value the ”goods”.
This valuation is often complicated
and associated with great uncertainty.
Hence, in practice, it is almost always
problematic to obtain the full range of
monetised impacts. In many cases, all
impacts are not fully quantified or it is
not possible to monetise the impact.
In these cases care should be taken
to interpret the quantitative results
of a CBA and the results should be
weighed against the data material. In
any case, all impacts should be mentioned in an analysis irrespective of
quantification or not. This means that it
is still better to give a description of the
impacts than having no valuation and
not mentioning the impact at all.
Economists are committed to the principle that economic efficiency should
be a fundamental criterion for public
investment and policy-making. This
implies that the benefits from the use
of the scarce resources are maximised
net of the costs of using them. This
principle is fundamental to the use
of CBA as a decision tool. However,
economists also acknowledge that
economic efficiency should not be
the sole criterion in decision-making.
Distributional and competitive considerations can be rational justifications
for deviation from the principles of
economic efficiency as an absolute
criterion for maximising the welfare
of society. Also, there is often a lack
of knowledge and information about
the environmental effects as well as
general uncertainty about prices and
valuation estimates. All of this can
make the result of CBA tentative and
incomplete.
In the EU Guide to Cost Benefit Analysis the limitations is summed up quite
well in the following statement (p. 15):
CBA is applied social science and not
an exact discipline. It is largely based
on approximations, working hypotheses and shortcuts, because of lack of
data or because of lack of resources
of evaluators. It needs intuition and not
just data crunching.
Cost effectiveness analysis
The cost-benefit analysis plays an important role for assessment of policies
and projects. However, as explained
above it has sometimes shortcomings
in relation to assessing and monetising
specific effects. When this is the case
cost-effectiveness can be a useful
alternative or supplement to the CBA.
A cost-effectiveness analysis (CEA) is
essentially a slightly simplified CBA.
The only difference is that one effect,
for which valuation is difficult or associated with great uncertainty, is not
included in the calculation of the net
result. Instead the net result is divided
by the effect (for example number of
person-dB reduced) for each policy option. This provides a picture of the net
costs of proving a specific effect (for
example noise reduction). Thus, CEA
is an economic analysis that compares
the net results and outcomes (effects)
of two or more options.
In the PERSUADE model both a CBA
and CEA result is calculated. The
reason for this is the considerable uncertainty associated with the unit cost
of noise. The CEA result is expressed
as EUR per person-dB (reduced). This
result allows for direct comparison of
the performance with other measures
to reduce noise such as noise barriers
or low-noise tyres.
2.3.2 V
aluation of noise
Noise generates annoyance effects
and adverse health effects on human
beings and therefore represents a social cost to society. Valuation of noise
often reflects these two aspects of the
costs of noise, annoyance and health,
and the benefits of noise reduction
come from the reduced annoyance
and the reduced health effects.
The methods for assessing annoyance
primarily take a starting point in either
the hedonic pricing method or stated
preference methods. Annoyance
is typically valuated by using direct
(Willingness-to-pay, etc) or indirect
valuation techniques (hedonic pricing
methods).
Health costs paid by society, such as
hospital costs, production loss and
welfare loss, could however not be
expected to be fully incorporated in the
estimated annoyance costs, although
there might be some overlapping.
Therefore these costs should be estimated separately.
In the PERSUADE model a unit costs
of noise can be specified for each of
the five countries represented in the
case studies. Thereby it is possible to
13
take account of differences between
countries and reflecting varying levels
of income and differences in population preferences with respect to noise
abatement.
2.3.3 Other externalities in relation
to noise mitigation
The PERS surface reduces noise in
comparison to a conventional surface, thus reducing the external cost
of noise. This is of course the main
benefit related to PERS but it potentially also affects a number of other
externalities such as accidents and air
pollution.
As already stated conversion of all
impacts to monetary values is a key
element of cost-benefit analysis.
Therefore the PERS model includes
modules to calculate and include
these effects. There is however not a
standard approach on how to include
the external effects and how to put
a monetary value on them. This was
discussed thoroughly in the SILVIA
project and the issues have also been
addressed in several other projects
carried out for the EU Commission,
e.g. the projects EXTERNE, PROMISING, UNITE and EUNET.
In this project, the main source for the
unit values for external costs used are
based on the HEATCO study which
is an EU study aiming at developing
a harmonised European approaches
for project assessment in the transport
sector.
For more information on the conversion of costs and benefits to monetary terms and input to cost-benefit
analyses of measures to control road
traffic noise the reader is referred to
the appendix of the SILVIA deliverable
Cost-benefit analysis.
2.4 Concept and approach
The PERSUADE model has been
developed based on the basic CBA
14
principles described above. However,
instead of calculating the present
value of all effects in the life time of the
PERS and reference surface, the annual value of all effects are calculated
(for the same year) and summed. This
means that all results are expressed
as annualised cost or cost per year.
The model calculates the cost and
benefits based on a range of input data
about the surfaces - their noise performance, investments, operation and
maintenance costs etc. - and a number
of assumptions. The model calculates
the economic result of applying a low
noise road surface (PERS) as an alternative to a conventional road surface
(the Reference).
2.4.1 F
ive cases – results for
selected case
Detailed information about case characteristics is one of the fundamental
inputs in the calculations. This includes
information on the road type, the
length and width of the road and the
traffic volumes in terms of the average
daily traffic on the road. The model has
been developed with five cases. The
user chooses one case and the results
for this case is presented in the model.
2.4.2 Specific and general
assumptions
One of the basic principles in the overall approach has been to differentiate
between case specific assumptions
and general assumption. The general
assumptions include the discount rate,
emission factors, the value of recycling
of tyres, and accident costs. For some
parameters EU values have been
included and can be used as fall back
values if no country (case) specific
values can be found.
2.4.3 Included effects
As explained above ideally all effects
should be included in the economic
analysis. In practise, in this model all
direct key effects have been included
(cost and noise effects). Indirect
effects such as emissions, benefits
from recycling of tyres and changes in
accidents have been included in the
model and can thus be included in the
calculation to the extent that it is possible to quantify the effects. Monetary
unit values have thus been included in
the model.
However, as poroelastic surfacing has
not yet been introduced on the market,
at this stage in the project there is only
limited practical knowledge available.
Consequently, there are a number of
unknown and uncertain parameters in
the cost-benefit analysis. Focus has
been put on the direct effect while the
indirect effects have not been estimated and thus not included in the
analysis at this stage. This is further
explained in the result documentation
“WP7 - Costs-benefit analysis” by Danish Road Directorate, 2011.
It is however important to stress that
the model has been developed to
support conversion of relevant impacts
to monetary values by including the
effects in the cost-benefit calculation
procedure that has been developed.
Further, default unit values for the
indirect effects have been included in
the model.
2.4.4 B
oth cost-benefit and costeffectiveness results
The cost of noise is associated with
great uncertainty. As a consequence
the model has been developed calculating both the total costs excluding
the benefit from noise reduction and
the total net result including the noise
costs. This essentially means that the
model has been developed both as a
cost-benefit and cost-effective model.
The net result relates to the costbenefit analysis and expresses the net
result to society as a whole including
the monetary benefit of noise reduction
of applying the PERS surface as an
alternative to the Reference surface.
Net result = ΔPers-Reference (Total cost +
Noise cost)
From the total costs the cost-effectiveness is calculated by dividing the
changes in total costs by the changes in
noise effect (expressed in person-dB).
Cost-effectiveness = ΔPers-Reference Total
cost / ΔPers-Reference Noise effect
The cost-effectiveness result expresses the cost of reducing one person-dB
by applying the PERS surface (EUR
per person-dB).
The cost-benefit result gives information about the economic result of the
PERS surface taking account of the
economic benefit of the noise reduction. In other words, it is a full comparison between the complete range
of costs and benefits. It expresses
whether the benefits of the PERS
outweigh the costs. Thus, this result
is useful in relation to evaluations of
economic performance of the PERS
surface.
The cost-effectiveness result is
expressed as EUR per person-dB
(reduced). This result allows for direct
comparison of the performance with
other measures to reduce noise such
as noise barriers, façade insulation,
traffic regulation, etc. The result is wellsuited for identifying the most cost effective measures to reduce noise as it
allows for direct comparison with other
noise mitigation measures. The costs-
effectiveness result can be used in
relation to analysis of which measures
that can be used to achieve a certain
objective/target at the lowest costs.
The advantage of the cost-effectiveness approach is that the (uncertain)
benefits from noise reductions do not
need to be monetised.
It should be noted that all results are
expressed per year. All results are also
calculated and presented per km road
to allow for comparison of case roads
of different length.
2.4.5 Sensitivity analyses
The sensitivity of the results can be
analysed in the model as a module
has been developed which allows for
traditional sensitivity analyses of the
impact on the results of variations in
key parameters. It is possible to run a
set of pre-defined sensitivity analysis
that provides an overview of the implications of changes in the key input parameters. It is also possible to perform
more advanced scenario calculations
in which assumptions/estimates for
the three main parameters are varied.
This generates result tables and charts
showing the result of variations in three
main assumptions.
2.4.6 Critical parameter analysis
One of the main purposes of the initial
stage of the project is to outline the
most critical parameters from the best
possible estimate of all influential
parameters. To facilitate this analysis a
critical parameter analysis module has
been developed and included in the
model.
In the module it is analysed how much
certain parameters should change to
obtain a net result of 0 for a PERS
pavement in comparison with the reference surface. For example it can be
analysed how much the cost of PERS
layer should be reduced or lifetime
increased to provide economic breakeven when a negative net result is the
outcome.
The critical parameter analysis (CPA)
is performed for one parameter at a
time keeping the estimates and assumptions for all other parameters
fixed. As an example, if the analysis
gives a negative net result with the
best estimate for all parameters for example the CPA analysis can calculate
how much the life time of the upper
layer should be increased to provide
economic break even. This could for
example be that the life time should be
increased from 3 years to 5 years.
The CPA module identifies the important and critical parameters and
provides help to focus the tasks in
other work packages by providing an
overview of how the different technical and economic parameters affect
the overall results. There are probably
trade-offs between the different properties of PERS that need to be considered in the development process. The
CPA module of the model can be used
in relation to this.
15
3. The PERSUADE CBA tool
Frontpage
Introduction
Key parameters and input data
Key parameters
Costs of Surfaces
Case input data
Noise reduction effects
Sensitivity analysis
Sensitivity
Background calculations
Cons cost & opex
External costs
!
Results and critical parameter
analysis
Results
Results sensitivity
Critical parameter analysis
Scenario calc
Figure 3.1Overview sheet.
This section provides a brief description
of the model, key assumptions, input
data and uncertainties. Finally, a brief
description of the outputs is provided.
3.1 Introduction and
content
The PERSUADE CBA tool has been
developed in an Excel spreadsheet.
Data for all five cases have been
included in the model and the user can
choose which of the cases to analyse.
It has been a high priority to ensure
that the model is user friendly as it
16
is expected that it will be part of the
deliverables of the PERSUADE Project
and be made publicly available for
others to use and/or further develop.
This means that the model has been
developed with separate sheets for
input data, background information
and calculations, and results.
The figure below illustrates the structure and content of the model.
The reader is referred to section 4 for
general instructions on how to use and
update the model.
3.2 Key assumptions and
parameters
The PERSUADE CBA model has been
developed around a number of overall
key assumptions:
▪▪
▪▪
▪▪
▪▪
Discount rate: 3.5% (adjustable)
Present Value calculated for 2010
(adjustable)
Price level: 2010 (adjustable)
Time horizon: equal to the lifetime
of the investments (varies) as all
costs (and benefits) are annualised before added
The overall key assumptions are easily
changeable by the user.
Beside the above overall key assumptions the model includes some further
key parameters. These are:
▪▪
▪▪
▪▪
▪▪
Noise costs (unit price)
External costs - unit prices and
emissions factors
Inflation indices
Currency conversion
The model has been developed with
default values for these key parameters. Below, the applied assumptions
are described.
3.2.1 Noise costs
Noise represents a social cost to
society, because noise generates annoyance effects and health effects on
human beings. Valuation of noise often
reflects these two aspects of the costs
of noise, annoyance and health, and
the benefits of noise reduction come
from the reduced annoyance and the
reduced health effects.
The methods for assessing annoyance
primarily take a starting point in either
the hedonic pricing method or stated
preference methods. Annoyance is
typically valuated by using direct (WTP,
etc) or indirect valuation techniques
(hedonic pricing methods).
Cost-benefit analyses as opposed to
cost-effectiveness analyses include
the benefits of the noise reduction in
monetary terms. Therefore, to calcu-
late the economic benefit of a noise
reduction from PERS a unit price for
noise reduction is needed.
person-dB per year, which is considerably higher than the unit value suggested by EU working group.
EU value
The model has been developed with
an overall default value for noise
reduction for EU as a whole. But it is
also possible for the user to specify
country specific values for the 5 cases.
The EU value is expressed as EURO
per household-dB per year and is
based on recommendations from an
EU working group on health and socioeconomic aspects2.
Linear relationship
The unit price above assumes a linear
relationship between noise levels and
costs. There is however indications
that there is an exponential relationship between noise, annoyance and
costs. The EU value assumes a linear
relationship between noise levels and
costs but in fact the official Danish unit
price assumes an exponential relationship.
The value is 25 EUR per householddB per year (in 2003 prices). Taking
account of the average number of
persons per household this corresponds to 13 EUR per person-dB per
year (in 2011 prices). This means that
the yearly benefit of reducing noise by
1 dB for 1 person is 13 EURO.
Exponential relationship
In the model it is possible to use an
exponential relationship between
noise and costs as an alternative to
the default assumption of a linear
relationship. If the user chooses to
use an exponential relationship he/she
needs to specify a weight for each 1
dB reduction in the interval from 55 dB
to 75 dB.
Danish value
Country specific values should be
applied instead of the EU value if
these exits. In the model the Danish
value has been included. The value
has been transformed from the official
Danish value expressed as DKK per
NEF3 to EUR per person-dB per year,
which is the unit in which the country
specific values needs to be specified.
This values is the latest value
available from the ministry of transport.
After the transformation, the Danish
value corresponds to 32 EURO per
This has been done for the Danish
case using the official Danish exponential relationship. The table below
shows the exponential relationship
between noise and annoyance for
Denmark.
The Noise Exposure Factor (NEF) is
calculated from the formula below:
NEF = 0.01 * 4.22(0.1(LAeq-41))
The weight of each noise level (1 dB
intervals) is calculated from a normali-
2 Working group on health and socio-economic aspects, 2003: Valuation of noise position paper,
4-december-2003.
3 NEF is short for Noise Exposure Factor (in Danish SBT: støjbelastningstallet) and is a unit which
is used in Danish social cost calculations in relation to noise. NEF expresses the total nuisances in a
defined geographical area and is calculated by weighing of households exposed to different noise levels.
17
sation where the weight of 1 equals
the average NEF in the interval 60-65
dB which equals 0.236 NEF.
Table 3.1 The official Danish relationship
between noise levels and annoyance.
LAeq
(dB)
NEF
Weight
53
0.06
0.24
55
0.08
0.32
56
0.09
0.37
57
0.10
0.42
58
0.12
0.49
59
0.13
0.57
60
0.15
0.65
61
0.18
0.75
62
0.21
0.87
63
0.24
1.01
64
0.27
1.16
65
0.32
1.34
66
0.37
1.55
67
0.42
1.79
68
0.49
2.07
69
0.56
2.39
70
0.65
2.76
71
0.75
3.18
72
0.87
3.68
73
1.00
4.25
74
1.16
4.90
75
1.34
5.66
77
1.78
7.55
Source: Own calculations based on
Danish Road Institute, 2005: Cost-
18
benefit analysis on noise-reducing
pavements, Report 146
The table shows that noise levels
below 63 dB has a weight lower than
1, while noise levels above 63 dB has
a weight higher than 1. A weight of 2 in
the interval from 68-69 dB means that
the economic benefit of reducing noise
in this interval is 2 times the average
value of 32 EURO per person-dB. As it
can be seen from the table in Denmark
reductions of noise in the high noise
levels are given a much higher weight
than noise in the low noise intervals.
3.2.2 External costs
The model has been prepared to take
account of any possible differences
between the PERS and reference
surfaces with respect to accidents and
emissions.
Accident costs
For accident costs it has been assumed that it is possible to estimate
changes in the number of expected
accidents per kilometre. The changes
in accidents per kilometres can be
calculated by estimating changes in
accident frequencies in percentage
between the PERS and reference
surfaces. The change in frequencies is
coupled with the average daily traffic
(ADT) and the length of the road to
give the change in accidents per km.
To calculate the total change in accident cost the model includes accident
unit cost per km. The unit costs are
differentiated for cars, heavy vehicles
and buses and have been based on
Danish unit values. The values are
presented in the table below.
Table 3.2Accident unit costs per km.
2011 prices
EUR/km
Cars
0.03
Heavy vehicles
0.17
Buses
0.06
Source: Transportministeriet, 2010:
Opdatering af værdier for transportens
eksterne omkostninger, COWI for
Transportministeriet, 2010.
As explained in the Result report
(WP7-D7.1) at this point in time changes in accident frequencies and thereby
changes in accident costs have not
been estimated nor included.
Emission costs
Emission costs are calculated from
changes in kg emissions. The changes
in emissions are calculated by estimating changes in energy consumption
in percentage between the PERS
and reference surfaces. The changes
in energy consumption are coupled
with the average daily traffic (ADT),
the length of the road and emissions
factors to give the change in emissions
per year.
To calculate the total change in emission cost the model includes emission
factors for cars, heavy vehicles and
buses and emission unit cost per kg.
The values are presented in the tables
below.
As for accident costs at this point in
time changes in fuel consumption and
thereby changes in emission costs
have not been estimated nor included.
Table 3.3Emission factors.
g/km
NOX
CO2
VOC
SO2
PM
Cars
0.2969
159.6825
0.0571
0.0057
0.0166
Heavy vehicles
7.9186
803.0303
0.2832
0.0477
0.1488
Buses
10.4364
883.3333
0.6601
0.0364
0.2905
Source: Transportministeriet, 2010: Opdatering af værdier for transportens eksterne omkostninger, COWI for Transportministeriet, 2010. VOC= Volatile Organic Compounds. PM=Particulate Matter
Note: For cars, average values for diesel and petrol applied. For CO2 energy consumption of cars, diesel: 18 km/l, cars, petrol: 14 km/l, HGV, 3.3 km/l and
buses 3 km/l applied
Table 3.4Emission unit costs (2002 prices) in Euro.
EUR per kg
NOX
CO2
VOC
SO2
PM
Denmark
1.8
0.029
0.8
1.9
520
Belgium
2.7
0.029
1.1
5.4
440
Poland
3.0
0.029
0.8
3.5
130
Slovenia
4.4
0.029
0.7
4.0
220
Sweden
1.3
0.029
0.3
1.0
440
Source: HEATCO - http://heatco.ier.uni-stuttgart.de/ - D5. Annex D table 6.2. Urban value
3.3 Input data
The key input data in the model is
information about the costs and noise
reduction effect of the surfaces and
data about the case characteristics.
3.3.1 Case input data
For each case data describing the road
where PERS is applied is needed:
▪▪
▪▪
▪▪
▪▪
▪▪
▪▪
Type of road
Number of lanes
Length and width of road
Speed
Average daily traffic
Etc.
applied to different locations and roads
with different traffic intensities. It is
also used for calculating changes in
accident costs and emission cost as
explained above.
This information is the basis of calculating the economic efficiency of PERS
19
Case characteristics
Name
No.
City
Description
of case
Implementation period
Denmark
1
Copenhagen
H.C. Ørstedvej,
Frederiksberg
Road type
Number of lanes (total both directions)
Length of road (km)
Width of road (meters)
Cycle path - Lenght (km)
Cycle path - Width (meters)
Foot path - Lenght (km)
Foot path - Width (meters)
City Street
Motorway
2 for 0.5 km and 4 for 0.5 km
4
1,1
0,4
17,7
15
0,5
0
0,8
0
1
0
1
0
Speed (km/h)
Average daily traffic (ADT)
Share of cars
Share of heavy vehicles
Share of Buses
Existing pavements
Belgium
Slovenia
4
Ljubljana
3
Warsaw
B 401
Sweden
Selected:
5
Gothenburg
Sweden
5
Marszalkowska
Celovska cesta
Övre Husargatan
Övre Husargatan
http://maps.google.pl/maps?f=d&source=s_d&saddr=Aleje+Jerozolimskie&daddr=52.223181,21.015809&hl=pl&geocode=Fa
http://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=N+46%C2%B004%E2%80%9959
http://www.tvane.se/kml/WP7_Sweden.kml
http://www.tvane.se/kml/WP7_Sweden.kml
0
City Street
City Street
City Street
City Street
4,5 4 (2 in each direction) 0.32 km4 (2 in each direction) 0.32 km
0,8
2,9
0,32
0,32
18
17,9
19
19
0,8
2,9
0,32
0,32
1
2
2
2
0,8
2,9
0,32
0,32
9
2
2
2
50
100
50
70
50
50
8500
93%
4%
3%
54302
98%
2%
0%
24899
93%
0%
7%
56316
95,50%
4,50%
0%
22600
97%
1,50%
1,50%
22600
97%
2%
2%
DAC 0/11
Distance to the buildings (meters)
Poland
2
Gent
AC-C2
DAC 0/16
35
Number of dwellings along the road (both sides)
Dwelling density per km
35
AC16
SMA 16
map
30 m between facades in northen part 40 m in the sothern part
SMA 16
354
Number of levels per building
Shops (share of buildings with)
5-6 (85%)
Persons per household (average)
90%
2,1 % 2 levels ; 17,6 % 3 levels ; 64,4 % 4 levels; 8,6 % 5 levels
7-8; 7,2 % 7 levels (based on noise maps)
0%
90%
2,2
Sources:
0
0
2,4
3,1
3,1
90%
2,9
2,9
CBA-inputdata-version07072010.xls
CBA-inputdata-version07072010.xls
CBA-inputdata-version07072010.xls
CBA-inputdata-version07072010.xls
VD, ECC
Figure 3.2Table with Case characteristics.
3.3.2 Costs of Surfaces
The total construction and operating
costs is calculated based on unit prices
of the surfaces, lifetimes etc.
Construction costs
Construction costs - Reference surface
Foundation
Lower asphalt layer
Upper asphalt layer
Sources:
Denmark
Unit price
EUR/m2
Lifetime
year
VD, ECC
VD, ECC
0
10,752688
9,4086022
25
12
12
Foundation
Lower layer
Upper layer
Source:
0
10,752688
16,2
Lifetime
year
0
10,75268817
6
Lifetime
year
2011 prices
Poland
Slovenia
Sweden
Selected
Unit price Lifetime
Unit price Lifetime
Unit price Lifetime
EUR/m2
year
EUR/m2
year
EUR/m2
year
25
7
15
25
20
0
25
12
10
10
13,2
10 10,752688
12
7,5
6
5
15,6
7
6
7,5
25
12
3
Belgium
Unit price
EUR/m2
0
10,75268817
16,2
CBA-inputdata-version07072010.xls As for Denmark
Lifetime
year
2011 prices
Poland
Slovenia
Sweden
Selected
Unit price Lifetime
Unit price Lifetime
Unit price Lifetime
EUR/m2
year
EUR/m2
year
EUR/m2
year
25
0
25
0
25
0
25
12 10,752688
12 10,752688
12 10,752688
12
3
16,2
3
16,2
3
16,2
3
As for Denmark
As for Denmark
Operating costs
Operating costs - Reference surface
Per year
Cleaning
Ice prevention
Denmark Belgium
Unit price Unit price
EUR/m
EUR/m
0,2688172
0,67
Sources:
VD, ECC, Gilles 20. sep.
0
0
Cleaning
Ice prevention
Sources:
Denmark
Unit price
EUR/m
0
1,34
Belgium
Unit price
EUR/m
VD, ECC, Gilles 20. sep.
Figure 3.3Table with cost of surfaces.
The unit costs can be specified for
each case separately.
20
Poland
Unit price
EUR/m
2011 prices
Slovenia
Sweden
Selected
Unit price Unit price
EUR/m
EUR/m
0,15
0,07852
0
0 0,0358698
0
Sweden
Unit price
EUR/m2
0
0
CBA-inputdata-version07072010.xls
CBA-inputdata-version07072010.xls
Operating costs - Persuade surface
Per year
Sweden
Unit price
EUR/m2
Lifetime
year
Sweden
Unit price
EUR/m2
Lifetime
year
0
10,752688
6
25
12
7,5
CBA-inputdata-version07072010.xls
CBA-inputdata-version07072010.xls
Construction costs - Persuade surface
Denmark
Unit price
EUR/m2
Belgium
Unit price
EUR/m2
0
0
Poland
Unit price
EUR/m
2011 prices
Slovenia
Sweden
Selected
Unit price Unit price
EUR/m
EUR/m
0,15
0,07852
0
0 0,0717395
0
Sweden
Unit price
EUR/m2
0
0
As for Denmark
0
10,752688
16,2
25
12
3
Construction costs
Construction costs should be specified
for both the PERS and the reference
surface. The construction costs consist
of three cost components:
▪▪
▪▪
▪▪
Foundation
Lower asphalt layer
Upper asphalt layer
For each component a unit price (EUR
per m2) and the expected average
lifetime should be specified (year). On
this basis coupled with the case input
data (length and width of road) the
total construction costs are calculated.
Further, the yearly costs are calculated by annualising the construction
costs using the discount rate and the
expected lifetimes.
At this stage of the project there has
only been estimated a change in the
cost between PERS and reference for
the upper layer.
Operating costs
Operating costs consist of cost for
cleaning and cost for ice prevention.
For both cost components a unit price
(EUR per m2) should be specified. On
this basis coupled with the case input
data (length and width of road) the total
operating costs per year is calculated.
Maintenance costs
Maintenance costs are modelled
separately from investment (construction cost) in the model. They simply
consist of the costs of removing the old
surfaces. Separate unit costs should
be specified for lower layer and upper
layer. On this basis coupled with the
case input data (length and width of
road) the total maintenance costs are
calculated. Further, the yearly costs
are calculated by annualising the
maintenance costs using the discount
rate and the expected lifetimes.
be specified - for example 8 dB.
Based on the average reduction
the model calculates the noise
mapping for PERS based on the
noise mapping in the reference
situation.
The noise reduction effect can be
specified for each case separately.
3.4 Output and results
The reader is referred to the PERSUADE project deliverable “WP7 Costs-benefit analysis” Danish Road
Directorate, 2011 for more information
on the cost estimates and lifetimes applied for the cases.
The model provides a number of results in terms of noise effect and economic efficiency of PERS and in terms
of information about the most critical
parameters (affecting the economic
performance).
3.3.3 Noise reduction effects
For each case the noise reduction effect needs to be specified.
The key results are:
The number of persons in each 1 dB
interval from 55-75 dB should be specified for the reference situation where a
conventional surface is applied. There
are two ways to specify the expected
effect of PERS.
1. Ideally, the effect is specified as
the number of persons in each 1
dB interval from 55-75 dB for the
situation where PERS is applied.
This can be done if the effect of
applying PERS is calculated in a
noise model which can provide a
full mapping of noise exposure.
2. If a full mapping is not available an
average expected reduction could
Results
▪▪
▪▪
▪▪
Noise reduction - persons-dB per
year
Cost-effectiveness - EUR per
person-dB per year
Net result - EUR per year
All results are expressed as total cost
for the case per year. All results are
also calculated and presented per km
road to allow for comparison of case
roads of different length.
The noise effect in itself is a key result
as it provides information about the
benefit in terms of noise reduction on
the specific road. The result is especially useful for comparison between
cases.
Results
Case country:
Denmark
Sensitivity:
Basic assumptions
Results
Total result for the case road
All cost and benefits expressed per year
Noise reduction
Noise
Cost effectiveness
person-dB
EUR per person-dB
Noise costs
EUR
Denmark
Reference
All cost and benefits expressed per year
Denmark
Reference
Noise reduction
Noise
Cost effectiveness
person-dB per km road
20.038
EUR per person-dB per km road
242.077
Noise costs
EUR per km road
-90.459
-441
-23.711
-114.611
External cost and benefits excluding noise
Air emissions costs
EUR per km road
Climate change costs (CO2) EUR per km road
Accidents costs
EUR per km road
Recycling of tyres
EUR per km road
Total
EUR per km road
-114.611
Total costs ex. noise
EUR per km road
127.466
Net result
EUR per km road
3.828
-18.214
6,3
-292.955
-50.877
-39.248
-1.033
-20.932
-61.213
-129.707
-1.474
-44.643
-175.824
External cost and benefits excluding noise
Air emissions costs
EUR
Climate change costs (CO2)
EUR
Accidents costs
EUR
Recycling of tyres
EUR
Total
EUR
-70.787
-24.491
-120.643
0
-215.921
-70.787
-24.491
-120.643
0
-215.921
0
0
0
0
0
Total costs ex. noise
EUR
-277.133
-391.745
Net result
EUR
Annualised construction, operating and maintenance costs
Construction costs
EUR
Operating costs
EUR
Maintenance cost
EUR
Total
EUR
22.042
Result per km road
Change
(PERS-Ref)
PERS
Change
(PERS-Ref)
PERS
3.480
-16.558
5,7
-266.322
-46.252
220.070
Annualised construction, operating and maintenance costs
Construction costs
EUR per km road
-35.680
Operating costs
EUR per km road
-939
Maintenance cost
EUR per km road
-19.029
Total
EUR per km road
-55.648
-117.916
-1.340
-40.585
-159.840
-82.236
-401
-21.555
-104.192
-64.352
-22.264
-109.675
0
-196.291
-64.352
-22.264
-109.675
0
-196.291
0
0
0
0
0
-251.939
-356.132
-104.192
115.878
* Positive value means that the Persuade surface result in a net economic benefit for society in general and vice versa.
Figure 3.4Result sheet.
21
The cost-effectiveness provides the
cost of achieving a one person-dB
reduction. In the calculated cost all
effects except the noise effect is monetised. The cost-effectiveness result
allows for comparison of the efficiency
of PERS as a noise mitigation measure with other measures such as noise
barriers or other low noise surfaces.
Finally, the net result provides the
overall economic result of using PERS
as a replacement for a conventional
reference surface. In this result also
the noise benefit (the noise reduction
in terms of person-dB reductions) is
monetised using a unit cost noise.
A positive net result means that the
PERSUADE surface provides a net
economic benefit for society in general
and vice versa.
Results can be generated for all cases.
The results are presented in tables
as showed in Figure 3.4 above, but
they are also presented graphically as
illustrated below.
600.000
Uncertainty, sensitivity analysis
and CPA
The input data and assumptions are all
associated with uncertainty. Therefore,
the models have been supplemented
by a standard sensitivity module, which
makes it possible to derive the significance of uncertainty on key assumptions such as discount rate, standard
unit prices, etc.
Further the model has been supplemented by a critical parameter analysis
(CPA) module which makes it possible
to analyse how much a specific parameter needs to be improved for the net
result to break-even (be exactly 0).
The CPA module produces results that
show how much certain parameter
should change to obtain a net result
of 0 for PERS in comparison with
the reference surface. For example
how much the cost of PERS upper
layer should be reduced or lifetime
increased to provide economic breakeven when a negative net result is the
outcome.
Total costs for Reference and Persuade
500.000
Noise costs
Recycling of tires
400.000
Accidents costs
Climate change costs (CO2)
EUR
300.000
Air emissions costs
Maintenance costs
200.000
Operating costs
Construction costs
100.000
0
Reference
Persuade
Figure 3.5 Example of output presented graphically - Net result.
22
Critical Parameter Analysis
Denmark
Critical parameters
Generel assumptions
Discount rate
External costs of noise
Unit
%
EUR/person-dB per year
Persons per household
person/household
Technical assumptions
Lenght
Width
Traffic volume
meter
meter
vehicles per day
Noise reduction effect - Persuade vs. Ref.
dB
Net effect on accidents (Persuade-Ref.)
Net effect on CO2 (Persuade-Ref.)
Recycling of tires
number of accidents
ton CO2
ton
Cost assumptions
Constr. costs - cost diff., Persuade vs. Reference
In percentage
PERS - Foundation
PERS - Lower asphalt layer
PERS - Upper asphalt layer
01/07/11 10.17
New value
for net result=0
Central value
3,5%
13
na
6
2,2
Not varied
1,1
17,7
8.500
Not varied
Not varied
Not varied
10
4,73
Currently not modelled directly
Currently not modelled directly
Currently not modelled directly
230%
555%
EUR/m2
EUR/m2
EUR/m2
0,0
10,8
16,2
na
76,2
35,2
Op. costs - cost diff., Persuade vs. Reference
In percentage
43%
12386%
PERS - Cleaning
PERS - Ice prevention
EUR/m2
EUR/m2
0,000
1,340
na
117,2
Main. costs - cost diff., Persuade vs. Reference
In percentage
113%
722%
PERS - Remove old surface - lower
PERS - Remove old surface - upper
EUR/m2
EUR/m2
5,8
5,0
71,3
24,0
Avg. lifetime Persuade surface (weighted)
Years
6,59
3,68
Lifetime PERS - Foundation
Lifetime PERS - Lower asphalt layer
Lifetime PERS - Upper asphalt layer
Years
Years
Years
25
12
3
na
2,05
1,54
Other assumptions
External costs of accidents
External costs of CO2
External unit value of recycling of tires
EUR/accident
EUR/ton CO2
EUR/ton
Currently not modelled directly
Currently not modelled directly
Currently not modelled directly
Figure 3.6 Critical parameter analysis results - example.
For more on the critical parameter analysis see also section 2.4.
23
4. User instructions
This section provides general user
instructions on the PERSUADE
CBA tool. A description of the model
fundamental structure and content is
provided and it is described how to use
and update the model. The instructions
are fairly basic and general and they
supplement the instructions already
included in the model.
Using (and in particular updating) the
model requires a thorough knowledge
of Excel. Not all details of the model
are described. Instead the overall
principles used in the model are introduced and useful information about the
functionalities is provided.
Frontpage
4.1 General principles
The PERSUADE CBA tool has been
developed in an Excel spreadsheet.
It has been developed with a set of
standard conventions including fixed
colours for text and numbers:
▪▪
▪▪
▪▪
▪▪
Input data are typed in blue
Results and formulas are typed in
black
Preliminary data are red
Data typed in green is a direct
cross-reference (no calculations
takes place in the cell).
each cell. This makes it easier to keep
an overview of the model and to track
the calculations that are carried out.
Another core principle of the model is
that no input data is repeated in the
workbook. Correspondingly, no input
data (figures) is allowed to be directly
typed in into formula cells. Whenever
reference to input-data is needed, the
formula points at a unique input data
cell. This ensures that updating input
data is simple and immediately penetrates all calculations.
This format allows the user to immediately identify the type of content of
Introduction
Key parameters and input data
Key parameters
Costs of Surfaces
Case input data
Noise reduction effects
Sensitivity analysis
Sensitivity
Background calculations
Cons cost & opex
External costs
Results and critical parameter analysis Results
Results sensitivity
Scenario calc
Figure 4.1 Structure of the PERSUADE CBA model (Sheet ”Overview”).
24
Critical parameter analysis
Model structure
The models sheets can be split into
four groups:
▪▪
▪▪
▪▪
▪▪
Introduction and information
sheets (white) that introduce and
explain the module objective,
structure and content.
Input data sheets (blue) that
include key assumptions and parameters used in the calculations.
Background calculation sheets
(no colour) that include all background calculations.
Output sheets (black) that present results
See sheet ”Introduction” for a complete
list of conventions used.
The model has a front page, a sheet
that introduces the model and a sheet
illustrates the model design (all sheets
are marked with white tabs following
the convention describe above).
The next sheet in the models is the
”Key parameters” sheet. This sheet
contains the general key input data
such as price level, calculation year,
inflation rates and discount rate. It also
includes data on the noise costs (unit
price) and data about other external
effects (unit prices and emission factors).
This sheet is followed by four sheets
which contain case-specific data that
should be specified by the user. The
sheet ”Case input data” contains
overall input data and information for
the specific cases in the PERSUADE
project. This includes overall characteristics of the cases such as name of
city and road and type of road and also
important quantitative information such
as length and width of the road.
The sheet ”Costs of Surfaces” contains
information about the costs of both
the conventional road surface and
about the PERS surface. This includes
data on construction, operating and
maintenance costs such as unit costs,
expected lifetime etc.
The sheet ”Effects” contains data on
the noise reduction effect of PERS. It
includes the noise mapping of number
of person exposed to noise in 1 dB
intervals in the reference situation. It
also includes the noise mapping with
the use of PERS. The expected noise
reduction effect of PERS could also
be calculated automatically by simply
typing the expected average noise
reduction effect of PERS.
Finally, there is a sheet (”Sensitivity”)
dedicated to sensitivity analyses. On
this sheet variations in key parameters
can be specified.
These input sheets are followed by two
background calculation sheets. On the
sheet ”Cons cost & opex” the construction, operating and maintenance cost
are calculated. All costs are calculated
as annual costs - expressed as EURO
per year. On the sheet ”External costs”
air emission costs, accident costs and
benefits from recycling of tyres are
calculated.
The results are calculated and presented on four sheets. The sheet ”Results”
presents the main results of the calculations, which is the net result of the
PERSUADE surfaces in comparison to
the reference surface. The sheet also
presents the noise reduction effect and
cost-effectiveness result. The results
are presented in tables and graphically
both as total results for the case and
as results per km.
From the sheet ”Results sensitivity” the
sensitivity analysis can be carried out
by activating a macro. The sensitivity
analysis results are presented in tables
and graphs.
From the sheet ”CPA” the critical
parameter analysis can be carried out
by activating a macro. The CPA results
are presented in tables showing the
central value and the new value resulting in a net result of 0.
Finally, from the sheet ”Scenario Calc”
scenario calculations with variations
in key parameters can be performed.
Result tables and charts can be generated showing the result of variations in
three main assumptions:
▪▪
▪▪
▪▪
Cost upper layer PERS
Lifetime - upper layer PERS
Reduction effect PERS
The results are generated automatically using pre-defined variations (can
be easily changed by the user) of the
base assumptions.
4.2 Operating the model
In its simplest form the model is easy
to use. It has been developed with
navigation buttons and drop-down
boxes which makes it easy to control.
To navigate the model the user can
either find the sheet of interest in the
tab-list at the bottom of the screen or
press the corresponding button on the
25
model overview sheet. All sheets in
the model have the buttons at the
top of the page leading you to the
model overview sheet or the result
sheet.
The model has been developed with a
set of predefined key parameters and
input data. These data can however be
easily adjusted by the user.
To generate results for a specific case
the user needs to specify at least
the following three types of data and
information:
1. General case characteristic data
- (type of road, number of lanes,
length and width of road, speed,
average daily traffic, etc.) - Sheet
”Case input data”.
2. Data on the costs of surfaces
that reflects the expected cost of
the specific case (unit costs and
expected life time for construction,
operation and maintenance) Sheet ”Costs of Surfaces”.
3. Data on the noise reduction effect
in terms of noise mapping of the
number of exposed person in each
1 dB interval for reference and
PERSUADE surfaces scenario Sheet ”Effects”.
On the sheet ”Key parameters” the
user could also specify country (case)
specific values for noise costs (unit
price). As default an EU average value
is used. If a country specific value
is specified the user should remember
to un-check the box ”Use EU average
value” on the ”Key parameters”
sheet.
The user could also adjust input data
that has been already specified. This
26
includes country specific values for
emission costs and inflation rates.
fied) variations in key assumptions
such as the discount rate etc.
When all the data has been specified the results are calculated and
presented on the results sheet. The
user should make sure to select the
relevant case in the drop down box,
which is on top of every sheet.
4.2.2 Conducting critical parameter
analyses
The user can also perform a critical
parameter analysis. This is a done
by simply activating the macro on the
sheet ”CPA”. The model will then calculate break-even values for the key
parameters. The results are presented
in a table at the sheet together with
the central/original value of the key
parameter for easy comparison of how
much the parameter needs to change
to provide a net result of 0.
From the results PERS can be compared to the reference surface over the
full range of costs and benefits. The
net result shows whether the benefits
of the PERS outweigh the costs.
4.2.1 Conducting sensitivity analyses
A number of sensitivity analyses have
been built into the model on the sheet
”Sensitivity”. The user can choose,
in the drop-down menu at the top of
the sheets, a number of predefined
sensitivity analyses. Furthermore, the
user can also specify other values for
the pre-defined analyses by changing to the values in column F. This will
immediately penetrate the calculations
when the corresponding sensitivity
analysis is chosen.
The user can also choose to specify
additional sensitivity analyses. This,
however, involves implementing
changes to the model. The user needs
to implement an ”if”-function to the parameter (or parameters) that is being
made subject to analyses. See sheet
”Sensitivity” for inspiration on how this
has been implemented for the predefined analyses.
On the sheet ”Results sensitivity” it is
possible to run a sensitivity analysis
module, which will then reflect the
results with pre-defined (or user speci-
It should be noted that in some situations it is not (mathematically) possible
to calculate a break-even value for certain parameters. In this case ”N/A” will
be stated as a result for this parameter.
4.2.3 Conducting scenario analyses
To get an overview of the interaction
between the three main assumptions
on the net result scenario analyse can
be carried out on the sheet ”Scenario
calc”. A set of pre-defined variations
(in percentage relative to the central
value) has been specified. When the
macro is activated these variation are
used to generate tables providing net
results with all the combinations of
variations of the three main assumptions. On this basis graphs are generated to provide a graphical picture of
the implication on the net result of the
variations.
The user could change the pre-defined
variations (the blue figures in the
tables) but this is not necessary as the
variation has been picked to provide
results with broad variations in the
three main assumptions.
4.3 U
pdating and adding
data
The model has been developed so
that it is easy to update. Essentially
all input data (blue figures) can be
updated just by typing in the new value
in the relevant cell. However, some
values should not be changed or only
changed with care.
Red data in the model means that the
data are uncertain or preliminary and
need to be updated or validated.
The key parameters sheet mostly
includes pre-defined assumptions and
data. These should only be changed
if there is a new or better source of
information. It is important to adhere
to the units applied in the model.
Hence, as an example, emission unit
cost needs to be specified as EUR/kg
emission.
On the sheets ”Case input data”,
”Costs of Surfaces” and ”Effects” all
input data (again only blue/red figures)
are easily updated. These data are
those which primarily need to be revised/updated as new/better information about the cases is provided. The
user is advised to specify/update the
source of information when data is
updated.
New data could of course be added in
the model, for example more external
effects. For an advanced user of Excel
it should be relatively easy. However, if
new data is added the user should be
aware that the calculation carried out
by activating macros could be affected.
For example the sensitivity calculation
could be affected if new data is added
on the result sheet.
The above instructions provide some
general and specific hints on how to
use and update the model. However,
it should be stressed that it has not
been possible to describe every possible use or type of update and as a
consequence the instructions are by
no means exhaustive.
4.4 Epilogue
A general important advice before
making any change to a model is to
always start by finding out exactly how
the specific data is being used in the
model. This is most easily done starting by using the tracking function in
Excel to find the cells that the specific
piece of data influences. Then scrutinising and understanding the formula
in which data is included and possible
continuing tracking the other cells that
is also included in same formula. Then
possibly also tracking the formula and
so on until a complete overview of the
influence is provided. This should provide insight into what possible needs
to be changed or added if the change
in data is made.
It is important to note that the model
has been developed to serve a specific
objective of providing information
about the economic performance of
PERS as a noise mitigation measure. The model has been developed
around the five selected case studies
and as a consequence it has been
given the highest priority to make the
model fit exactly the analysis of these
cases.
This means that applying the model for
other situations than the five cases requires updating and adjustments to the
model. The model cannot be (readily)
used for analysis of other measures
than PERS. But the fundamental principles of the model can be transferred
and applied in relation to analysis of
the economic efficiency of other measures - for example noise barriers. It
requires that case and cost information
is replaced and that all background
calculations are adjusted to the possible new dimensions of costs.
Another important general advice is to
work with versions of the models. Each
time a critical change is made to the
model it should be saved with a new
consecutive version numbering. This
way it is always possible to return to a
version of the models that functions if
changes are associated with errors..
27
5. Outlook and
recommendations
The model has been developed on the
basis of the information available at
this stage of the project. This section
presents limitations and uncertainties in the analysis and discusses
the development perspectives for the
models.
5.1 U
ncertainties and limitations
The applied data and assumptions are
associated with uncertainty although
great attention has been paid to
provide a solid basis for the analysis
at this stage of the project. Special
attention should be drawn towards the
following uncertainties and limitations
of the model:
▪▪
▪▪
28
Ideally all impacts should be
included in the CBA by identifying,
estimating and fully quantifying
the impacts in monetary values.
In practice, it is however almost
always problematic to include the
full range of impacts. This is also
true in this project. Some impacts
are not identified. Some impacts
cannot be quantified. Some impacts cannot be monetised.
Not all external effects are included. The ambition is to recycle
tyres in the production of PERS.
The re-use of tyre materials is
expected to provide environmental
benefits in comparison to other
disposal options. This potential
▪▪
▪▪
benefit is not included in the CBA
as it has not been possible to put
a monetary value on the recycling
of tyres. Also changes in accident costs and emissions costs
are not included. The model has
been developed with appropriate
unit prices but at this stage in the
project it has not been possible
to estimate change in accident
frequencies or fuel consumption
between the PERS and the reference surface.
The model allows for the noise
effect to be specified as a general
expected average reduction effect.
This is an approximation which is
associated with uncertainty. It is
better to provide the effect through
noise model calculations providing
a full noise mapping directly. This
is also possible in the model but
has not been used at this initial
stage in the project.
The construction costs have been
modelled with three cost components. However, at this stage it
is only the difference in the costs
of the upper layer that has been
estimated.
In spite of the uncertainties mentioned
above, the model could still be used
at this stage of the project as a tool
to provide useful information of the
potential and limitations of the PERS
technology and outline the most criti-
cal parameters affecting the economic
performance. There is however room
for improvements of the model, which is
further discussed below.
5.2 D
evelopment perspectives
As previously described, the CBA tool
is intended to serve as instrument in
the process of improving the characteristics of the PERS. In the end, a final
cost-benefit analysis will be carried out
to appraise the economic efficiency of
PERS as a noise mitigation measure.
Taking into account the relative short
amount of time that has been available for the initial stage, it has not been
possible to provide all the data ideally
needed for the analysis and the quality
of some of the data could be improved.
To some extent it has also been necessary to compromise regarding the level
of detail in the modelling and some of
the intended functionalities of the models have not been fully developed.
In the next stage, it is the ambition to
develop the model further by improving
the quality of the data input and possibly
filling in data and information gaps. In
the final analysis, the potential of PERS
should be evaluated from the results of
the test sections and comparisons with
selected alternatives mitigation measures should be carried out. To facilitate
these comparisons the model needs to
be supplemented by data and calculations of other measures such as noise
barriers, façade insulation or other
types of noise reducing asphalt.
There are some possible developments
of the CBA framework that should be
stressed.
The model could be further detailed
with regards to construction costs. More
cost components could be included to
take account of possible difference in
lifetime of more components.
Further, more data on the economic
effects of asphalt recycling and waste
handling, as well as other potential
effects on water pollution and sustainability could be included.
5.3 Concluding remarks
This report has been prepared under
WP7 of the PERSUADE project,
which deals with ”Cost-Benefit
Analysis”. It provides the technical
documentation of the CBA model that
has been prepared to support the appraisal of Poro Elastic Road Surfaces
(PERSUADE). The overall objective
of WP 7 is to appraise the economic
efficiency of PERS in comparison
with conventional surfaces and in
comparison to other noise mitigation
measures.
This documentation together with
the developed spreadsheet model
constitutes one of the main WP 7 outputs at the initial phase of the project.
The CBA model has been tailored to
analyse the economic implications
of applying the PERS surface as a
substitute for a conventional asphalt
surface (reference surface). The
model can be used to analyse the implication of applying PERS at specific
locations. It is flexible to handle the
up to five cases (in up to five different
case countries). It includes both the
direct and indirect effects of changing
pavements.
The model supports extensive sensitivity analysis. It thus includes three
modules which aim to facilitate identification of the most critical parameters
from the best possible estimate of all
influential parameters.
29
6. References
1.Danish Road Institute, 2005:
Cost-benefit analysis on
noise-reducing pavements,
Report 146.
2.Danish Road Institute, 2011:
WP7 - Costs-benefit analysis,
PERSUADE project deliverable, 2011.
3.European Union, 2008: Guide
to Cost Benefit Analysis of Investment Projects. July 2008.
4.European Commission, DG
Environment, 2006: Noise
classification of road pavements, Task 2: Cost-effectiveness of low noise pavements.
COWI for EC, 2006.
30
5.HEATCO (2006): Proposal
for Harmonised Guidelines.
Developing Harmonised
European Approaches for
Transport Costing and Project
Assessment, HEATCO, Deliverable 5. EU 6th Framework
study. 2006.
6.Saelensminde K and Veisten
K, 2005: Cost-benefit analysis. SILVIA Project Report.
7.SILVIA, 2005: Cost-Benefit
Analysis Tool
8.SILVIA, 2005: Cost-benefit
analysis. K Saelensminde,
TOI and K Veisten, TOI, 2005.
9.Transportministeriet, 2010:
Opdatering af værdier for
transportens eksterne omkostninger, COWI for Transportministeriet, 2010.
10.Working group on health and
socio-economic aspects,
2003: Valuation of noise position paper, 4-december-2003.
The Danish Road Directorate’s headquarter is situated in Copenhagen
and local offices are situated in Aalborg, Skanderborg, Middelfart,
Næstved and Fløng.
You will find more information on www.vejdirektoratet.dk.
VEJDIREKTORATET
Niels Juels Gade 13
Postboks 9018
1022 Copenhagen K
Tel.: 0045 7244 3333
[email protected]
vejdirektoratet.dk