Reverse-engineering of the rule-of-half in order to retrofit an assessment procedure based on resource consumption

Abstract

The German evaluation procedure for the Federal Transport Infrastructure Plan (‘Bun-desverkehrswegeplan’) is a large-scale and comprehensive modeling, simulation, and eval-uation effort. An important component of the evaluation procedure is a cost-benefit analy-sis, based on the concept of resource consumption. This concept means that new transport infrastructure causes changes in the consumption of time, money, safety, environment, etc. In this paper, we show that — assuming elastic demand for the facility under consideration — the current approach is not in line with basic consumer theory. This stems from incon-sistencies between the behavioral model and the evaluation method: ignoring unobserved attributes of the different transport modes in the evaluation can lead to quite different eco-nomic gains than when these attributes are considered. Current practice in other EU coun-tries avoids this problem typically by applying the so-called rule-of-half, or by directly deriving the logsum term from the underlying logit model. However, a change in the Ger-man assessment procedure towards one of these best-practice approaches for the upcoming Federal Transport Infrastructure Plan in 2015 seems politically not feasible. We therefore propose an easily applicable procedure to include the logic of the rule-of-half into the exist-ing evaluation approach. We show that the resulting calculation yields the same result as the rule-of-half while maintaining the rest of the former evaluation method. Finally, we discuss how another German assessment scheme for urban public transit projects, which is currently under revision, fits into the proposed procedure.

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