Cycling's benefit-to-cost ratio is off the scale, discovers DfT

Carlton Reid
Cycling's benefit-to-cost ratio is off the scale, discovers DfT

A new statistical report from the Department for Transport shows that investing in cycling brings huge economic, social and health benefits, with some cycling schemes having a benefit-to-cost ratio (BCR) of up to 35 to 1. The newly-funded cycling schemes have BCRs of 5.5:1 – the Department for Transport said this means that "for every £1 of public money spent, the funded schemes provide £5.50 worth of social benefit."

The DfT's "Value for Money" guidance says a project will generally be regarded as "medium" if the BCR is between 1.5 and 2; and "high" if it is above 2. In transport terms, 35 to 1 is most definitely "off the scale". 

To put this into perspective, the Eddington transport study of 2006 said the BCR for trunk roads was 4.66, local roads 4.23 and light rail schemes a measly 2.14. The UK's £43bn HS2 rail project has a BCR of just 2.3.

The Eddington report recommended that the government should prioritise spending on transport schemes that generated high BCRs – it's likely that after today cycling organisations and advocates will be rubbing ministerial noses into the cycle-specific BCRs at every opportunity.

Ministers often state that road and rail projects offer "high" benefit to cost ratios. However, the Treasury states that transport spending has to be prioritised not on projects with "high" BSRs, but with the "highest." According to the rules, announced in 2007, transport spending had to be "focused on the projects with the highest returns." From today's two reports it's clear that cycling offers the highest BSRs.

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The DfT's newest findings are based on evaluations of the schemes funded by the government's £94m Cycle City Ambition Grants. These grants were started in August last year and were awarded to cities for capital expenditure on cycling and walking infrastructure. (Money was also granted to National Parks.)

Eight cities were awarded a total of £77m and four National Parks received £17m of funding.

The cycling schemes in Cambridge and Oxford had the highest BCRs, with 35.5 and 16.5 respectively.

The DfT economists worked out that over 60 percent of the benefits estimated for the Cycle City Ambition Grant come from increased physical fitness. 

This tallies with another ground-breaking DfT report, "Claiming the Health Dividend", also released today. Written for the DfT by Adrian Davis of the University of the West of England, the report riffs on the many benefits of "active travel", stressing that the investment case for cycling is "compelling."

Dr. Davis wrote:

"Most transport investment is assessed for its value for money using methods which compare costs against benefits over the lifetime of a project. Traditionally most of the benefits have been associated with reductions in travel time, almost always focused on vehicle occupants. In recent years the Department for Transport’s approach to economic appraisal has been revised. This has established that benefits should be assessed in much wider terms – economic, environmental, social and distributional. The Department’s own objectives have been updated to reflect such wider concerns.

"[The DfTs] vision is for a transport system which is an engine for economic growth, but one that is also greener and safer and improves quality of life in our communities. One of the consequences of these changes is that potential health benefits arising from transport investment are now an integral part of the assessment and decision making process. Walking and cycling are the principal means by which we can build physical activity into our lifestyles and so stay healthy, become more healthy and/or reduce our risk of developing 20 conditions and diseases. These health impacts are not only a drain on the NHS but on the economy not least through absenteeism. So, a healthier population makes for a more robust and prosperous economy."

He added: "Improving health through cycling and walking benefits society at large. [The] benefits such as savings in travel time, congestion and accidents ... are compelling."

The monetisation of the health benefits follows the World Health Organisation's HEAT tool (health economic assessment tool). This is based on evidence showing that people who are more physically active have a lower rate of premature death when compared to less active individuals. The tool provides a formula to translate increases in cycling or walking into a reduction in the individual's risk of premature mortality. This reduced risk is expressed as the number of lives saved due to the intervention. 

Dr. Davis said: "Walking and cycling have been identified as a key means by which people can build physical activity into their everyday lives. [The] economic justification for investments to facilitate cycling and walking had previously been under-rated or even ignored. Much of the benefit is derived from reductions in premature deaths with large consequent savings in terms of health and knock–on benefits to the economy.

"The time savings of cycling, in particular, are very large to users and that this alone should result in a change of view so that cycling is seen as a competitive model of travel in the urban context and not primarily to achieve improved health or reduce car use."

The DfT's own conclusion is that "targeted investment into cycling can bring very strong returns to society." Dr. Davis goes further, as he concludes: "By far the best returns [for the Treasury] come from smarter choices, local safety schemes, cycling schemes, and the best of local bus and some rail quality and reliability enhancements, together with new light rail systems in some places. Traditional road capacity schemes are now giving much lower estimated value for money than cited in Eddington, due (a) to a change (for the better) in the way that taxation is accounted for in the studies, and (b) the effects of lower motorised traffic growth, whether due to road pricing, other policies, or to changing trends."

Critically, Dr. Davis adds that spending on cycling can bring quick returns: "Evidence of the high value of BCRs for cycling and walking should also be considered alongside the speed of delivery of walking and cycling interventions which for infrastructure projects are usually within 2 years compared to 8-12 years for major schemes, adding to the activeness of cycling and walking interventions."

Today's two reports make the clear and unequivical economic case for spending more on cycling and walking, and less on motoring. Despite this it's plain that the Department for Transport will plough on with hugely expensive road and rail projects that even by their own calculations offer staggeringly poor value for money compared to cycling and walking projects.

 

Tags: dft , BCRs

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