Cost-Effectiveness of Southern California Public Transportation Projects

by Dan McCabe

California recently established a carbon cap-and-trade program in the interest of improving air quality and fighting global climate change. The tax revenues generated from this program are used to fund projects that help reduce greenhouse gas (GHG) emissions, but policymakers face the challenge of deciding which projects are best suited for this funding. To inform this decision-making process, Matute and Chester (2015) compared the effectiveness of different current and future public transportation projects to determine which is the most cost-effective, in terms of public dollars spent per ton of carbon dioxide equivalent released. The study compared four projects from Los Angeles County: the Orange Bus Rapid Transport (Orange BRT) line in the San Fernando Valley, the Gold Light Rail Transport (Gold LRT) line that runs from Los Angeles to Pasadena, a bicycle and pedestrian pathway along the Orange BRT line, and the California High Speed Rail (CAHSR) project, a plan being developed to expand high-speed rail throughout the state. All four projects were found to have negative costs per ton of carbon dioxide reduced, indicating that they actually save the public money over time. For a 100-year period, the bicycle pathway was found to be most cost-effective, followed by the Gold LRT, Orange BRT, and CAHSR.

Throughout their paper, the authors stressed the importance of the economic metrics used to assess the effectiveness of each project. They quantified this significance by computing the per-ton cost of reduced emissions according to four different methods. According to each of the first three methods, which considered public costs for initial construction, continued operation, or both, none of the projects could reduce pollution at a cost less than the cap-and-trade rate of $12/metric ton. However, the authors also developed their own cost analysis framework that incorporated into cost assessment the expenses saved by the public due to the new systems—that is, reduced automotive and air travel. When these reductions in private costs were taken into account, all four of the projects analyzed were found to be cost-effective, saving hundreds to thousands of dollars per ton of carbon dioxide equivalent emissions reduced.

Matute and Chester’s research paves the way for future assessments of the cost-effectiveness of public transportation projects. At a time when California is considering a wide assortment of public transportation projects to reduce automobile traffic, air pollution, and GHG emissions, comprehensive assessments of the environmental and economic impacts of these programs are needed to help policymakers make better decisions. In their analysis, the authors highlight how much of an impact the economic assessment technique has on study results and the uncertainty in their own findings, while also proposing a novel assessment system that more accurately quantifies the economic impacts of different projects. Their thorough approach will be useful in determining how California can do the most environmental good with the cap-and-trade fees it collects and continue to be a national leader in environmental progress.

Matute, J.M., Chester, M.V., 2015. Cost-effectiveness of reductions in greenhouse gas emissions from high-speed rail and urban transportation projects in California. Transportation Research Board 94th Annual Meeting, 1-14.

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