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Cost-benefit analysis of adaptation to climate change for a railway infrastructure manager in France.
.....alain quinet, SNCF Reseau; and julien brunel, SNCF Reseau
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The weather has always been a subject of interest for railway infrastructure managers. The railway network, which is mostly located outdoors, is constantly exposed to weather events that can affect the reliability of operations on the network. With climate change, infrastructure managers need to evolve their practices. They may adapt maintenance and monitoring policies. They can also invest in new assets to account for new damages.
Our article offers a contribution to this issue by studying how cost-benefit analysis can help guide the actions of the infrastructure manager. We know since the pioneering work of Van Dantzig that cost-benefit analysis can guide choices in weather hazard prevention. This analytical framework can be extended without major difficulty to the case of prevention actions related to climate change. However, there is a significant specificity in the case of climate change. The trajectory of climate change is uncertain because it depends on global exogenous parameters such as economic growth, greenhouse gas reduction policies, or technological advancements.
For cost-benefit analysis, this uncertainty leads to a change in the decision criterion. We examine the relevance of alternative decision criteria that allow the infrastructure manager to evaluate different strategies for adapting to climate warming. One possible approach is expected value calculation but faces operational difficulty related to scenario probability. These limitations suggest the use of other approaches such as Wald's criteria (maximin) or Savage's criteria (minimizing regret). In the end, we demonstrate, starting from an illustrative case, that the implementation of these criteria leads to recommending more cautious actions than those resulting from a standard evaluation.
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Evaluation of transport infrastructure using an integrated model of induced travel and mode choice.
.....jerome massiani, Università Milano Bicocca; and Emile Quinet, Paris school of Economics
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Discrete choice modelling has become the dominating practice for transport planning. However a well- known feature and, arguably, a limitation of this model is to separate mode choice and trip generation. It is routinely implemented assuming a given trip matrix, that in some occurrence, like in the canonical 4 steps model, implies to separate trip generation and distribution from mode choice. Such separation may generate inconsistencies compared to a possible unified model.
It is thus relevant to think of an integrated approach which gathers induced trips and mode choice in a single model. The purpose of the proposed contribution is to set up a micro-founded model for personal trips including induced travel and mode choice. In this model, travellers face a trip destination and can choose among two modes to reach this destination. They also consume a generic good depending on how much is left to them in alternative to spending on transport and destination activity. Goods bear taxation, extra-profit and can generate externalities. We assume an improvement of transport mode takes place. We derive individual and collective demand responses and welfare measures.
The model provides relevant results:
First it provides a categorization of trips that is more rigorous than the usual distinction in use among transport evaluators.
Second, based on this categorization, it shows that part of the demand reaction can be absent from forecast and evaluation. One intriguing notion is the one of “induced trips of transferred users”, a notion that has no reason to become apparent in the usual framework.
Third, the model shows that certain impacts are absent in the usual framework. For instance, the hypothesis of Extreme Value distribution becomes problematic when generated trips are included in the framework, in a sense that we better define.
Fourth, the proposed model sheds lights on certain controversies : for instance the tax inclusion in NPV calculation.
Fifth, the model can be used to analyse some evaluation paradoxes, that have been occasionally discussed in project evaluation : the fact that a built infrastructure should better never be opened or the fact that a scenario with higher traffic may have a lower Net Present value.
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Optimizing fuel taxation between environmental benefits and socio-economic costs.
.....Richard GRIMAL, CEREMA
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Our communication deals with the optimal level of fuel taxation in France, as a balance between environmental benefits and socio-economic costs. If energy taxation is usually perceived as an efficient tool to reduce car use externalities, this efficiency nonetheless depends on price elasticity. In addition, by rising energy prices, fuel taxation also generates socio-economic costs for car users, through the increase in transport expenditures, and the disutility caused by the partial renouncement to travel, resulting in a loss of consumer surplus. In order for fuel taxation to be beneficial at the socio-economic level, collective benefits – the environmental benefit resulting from avoided externalities, and socio-economic welfare created through public spending – must exceed its individual shortcomings – the extra energy cost for households, and the welfare loss caused by the renouncement to travel. The optimal level of fuel taxation will be obtained by maximizing this net socio-economic outcome. For our calculation, we use official traffic series at the national scale, conventional externality values, while fuel price elasticities are taken from the literature, and fiscality is first supposed to be socio-economically neutral. In France, car traffic was found to be quite inelastic in recent econometric studies, implying that the environmental benefit, along with the welfare loss of fuel taxation, are negligible. As a result, its net socio-economic outcome mainly depends on the good use of public funds. This outcome is also deteriorating with rising oil prices, reducing the optimal level of fuel taxation over time. However, as parameter values are uncertain – in particular, the valuation of externalities, and the socio-economic return of public spending, do not rely on a scientific basis, but rather manifest a temporary political consensus - sensitivity tests are implemented. Finally, we question the reproducibility of our methodology and results in other national contexts.
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Benefit-Cost Analysis Affecting Policymaking in the European Union.
.....Kristina Gogic, Independent Researcher in the Field of BCA
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Keywords: BCA, Policymaking, EU
Research question:
How does BCA affect policymaking in the EU?
Methods: Research through the Internet of the relevant sites, comparing the novel with the previous research
Benefit-cost analysis (BCA) is an analysis that the European Commission used e.g.in the field of the Research, Development, and Innovation (RDI) Infrastructures - Strategy for Europe 2014-2020, when it was a new field. This research is composed of the existing data with the new data. This is one of the examples which proves that the BCA is important for the Strategy for Europe. Every year the European Commission adopts its annual work program setting the list most important actions it will take in the year ahead. That is, in fact, the policy-making, creating policy for all European citizens; through the projects, through the budget. Securing finance is always important. If it is not possible to secure finance for a particular project then it is not possible to realise the project. So, the influence of the BCA on the policymaking of the EU is visible through the previous example of RDI infrastructures. It is a generic name for investment projects that are designed and operated according to very different specifications and cannot be analyzed with the same degree of standardization of methods. Investment projects of infrastructures are very important for growth in general, in particular for the smart, sustainable, and inclusive growth that will create new jobs. The conclusion is that good decision-makers who are usually politicians play the main role in forming a good strategy, which should bring a better future for all European citizens. A good strategy of the EU affects its business connections with third countries too. That is important for International Development, where recently Brexit brought some significant changes, for all sides in the businesses.