Scandinavian Working Papers in Economics

Working papers in Transport Economics,
CTS - Centre for Transport Studies Stockholm (KTH and VTI)

No 2011:22: The value of time and external benefits in bicycle appraisal

Maria Börjesson and Jonas Eliasson ()
Additional contact information
Maria Börjesson: KTH, Royal Institute of Technology, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Jonas Eliasson: KTH, Royal Institute of Technology, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden

Abstract: We estimate the value of time savings, different cycling environments and additional benefits in cost-benefit analysis of cycling investments. Cyclists’ value of travel time savings turns out to be high, considerably higher than the value of time savings on alternative modes. Cyclists also value other improvements highly, such as separated bicycle lanes. As to additional benefits of cycling improvements in the form of health and reduced car traffic, our results do not support the notion that these will be a significant part in a cost-benefit analysis. Bicyclists seem to take health largely into account when making their travel choices, implying that it would be double-counting to add total health benefits to the analysis once the consumer surplus has been correctly calculated. As to reductions in car traffic, our results indicate that the cross-elasticity between car and cycle is low, and hence benefits from traffic reductions will be small. However, the valuations of improved cycling speeds and comfort are so high that it seems likely that improvements for cyclists are cost-effective compared to many other types of investments, without having to invoke second-order, indirect effects. In other words, our results suggest that bicycle should be viewed as a competitive mode of travel and not primarily as a means to achieve improved health or reduced car traffic.

Keywords: Cost benefit analysis; Value of time; Bicycle

JEL-codes: R41; R42; R48

20 pages, December 13, 2011

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CTS2011-22.pdf PDF-file 

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Published as
Maria Börjesson and Jonas Eliasson, (2012), 'The value of time and external benefits in bicycle appraisal', Transportation Research A, vol 46, no 4, pages 673-683

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