Institute of Transportation, MOTC

Shu-Mei Wang, 2007,06
Institute of Traffic and Transportation National Chiao Tung University

　　The purpose of the study is to develop and experiment with an integrated cost-benefit model for an environment-sensitive transportation project. It is well known that the current methodologies of assessing environment-sensitive projects have limitations. In this regard, the widely-adopted exercise which involves the “Environmental Impact Assessment (EIA) and the traditional Cost Benefit Analysis (CBA) in a sequential way may be flawed with a failure to calculate the resultant economic and environmental impacts in a same setting and at the same time. Contingent Valuation Methods (CVM) could take environmental factors into account and by far is the most frequently applied methodology. However, the CVM mainly deals only with the environmental impacts, paying not much attention to the economic impacts and still falling short of expectations.

　　Given the above weakness it is necessary to develop a process which integrates the CBA with CVM to evaluate the overall effects. Consequentially, this study sets to go a step further than the previous research by developing a step-by-step process which integrates the CBA with the CVM to assess the overall effects (both the environmental and economic impacts) for a transportation project.

　　In studying this issue, the Pinglin Interchange appears to provide an interesting case. Although within this issue, such a high-profile case as Taiwan high speed railway, the biggest BOT case, is large in scale and draws much attention, this is obviously not the case in the Pinglin Interchange. However, the Pinglin Interchange does provide a manageable case to experiment with the development of an integrated CBA with environmental factors for an environment-sensitive project. Indeed, the paper goes a step further than the previous research by exploring the issue at the practice level, which may hopefully be more insightful.

　　The empirical results show that an integrated CBA may produce an entirely different conclusion from the one resulting from the common evaluation exercise of combining the EIA and the traditional CBA. Specifically speaking, while the common evaluation exercise led to a favorable conclusion, in the case of the Pinglin Interchange, the net annual benefit was estimated at NT$550 million per year when the environmental effects are excluded. On the other hand, the results of our integrated CBA suggest that the construction of the Pinglin Interchange may not be cost-effective, in terms of the joint effects of the environmental and economic impacts. If the environmental effects are monetised and taken into consideration, the net deregulated effect will become negative NT$1,954 million per year.

　　By implication, an environmentally acceptable transportation project, such as the Pinglin Interchange, though is justifiable in terms of the EIA, may not necessarily be a social optimal project. Therefore, to make the socially optimal decision for an environment-sensitive project has been troublesome for the planners because they have to take into account both the resultant environmental impacts and economic impacts. Instead of developing something new, the study arguably has managed to find a short-cut to the above mentioned problem by integrating the CVM and traditional CBA on a same scale.

　　This study further examines the role of the use fee in controlling pollution. It is well known that levy user fees in environment sensitive area will normally lead to a reduction in the number of tourists, thereby reducing environmental pollution. In this regard, the study applies the DB-DC approach to evaluate the effect of collecting user fee on the number of tourists in Pinglin. The results show that the government could set user fee at NT$62 and could reduce 24% of the tourists and the level of pollution will be reduced accordingly.

　　In addition, the logic model is also used to examine the effects of socioeconomic characteristics on tourists’ WTP. The estimated results demonstrate that female, high income, metropolitan residents, low level of education, public employee and people under the age of 60 tend to have higher WTP. Moreover in-depth interview indicates that regardless of the socioeconomic characteristics, public’s confidence in the capability of government enforcement affects people’s WTP distinctly.

　　In summary, this study addresses the need to develop an integral plan for WTP approach in project appraisal. The results of this research can be transferred to other areas of policy-making definitely, such as recreation industry and transportation constructions which are trying to avoid environmental damages. On this regard, identifying interested parties motivations is a very key factor of enforcing public polices. It is necessary for the government authorities to recognize related parties’ concerns and create fine communicative atmosphere. As a result, it could facilitate the process of pursuing sustainable development.

　　Finally, this thesis has shown that it is imperative to encompass a wide range of environmental factors in the project appraisal process. There are a number of issues arising from this work that require further exploration which includes: (1) extending elicitation techniques in CV approach; (2) controlling the survey period to mitigate bias; (3) identifying the tools of environment protection; (4) combining stated preference and revealed preference data; (5) pricing automotives as an alternative to alleviate pollution.