Eda Ustaoglu, Brendan Wıllıams and Laura Petrov on "Developing a CBA Methodology for the Scenario-based Land-use Impact Assessment of Proposed Rail Investments in the Leipzig Region"

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DEVELOPING A CBA METHODOLOGY
FOR THE SCENARIO-BASED LAND-USE
IMPACT ASSESSMENT OF PROPOSED RAIL
INVESTMENTS IN THE LEIPZIG REGION
University of Aberdeen 1st October 2010
Dr. EDA USTAOGLU JRC-IES Sustainability Assessment Unit, Ispra, Italy.
Dr. BRENDAN WILLIAMS School of GPEP, University College Dublin, Ireland.
Dr. LAURA PETROV Department of Environmental Science, Aarhus University, Denmark.
10th-12nd May, 2012
INPUT 2012: 7th International Conference
Informatics and Urban and Regional Planning
Cagliari, Sardinia

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Content
1. Introduction: Context & Contributions
2. The Leipzig Area
3. The MOLAND Model
4. Scenario Analysis from the1st October 2010
University of Aberdeen MOLAND Model
5. Scenario-Based Cost-Benefit Evaluation Process
6. Conclusions & Future Work

3. 3
Context & Contributions
University of Aberdeen 1st October 2010

4. 4
THE LEIPZIG AREA
Leipzig had experienced an urban shrinkage
process starting from the first half of
1990s.The reasons for this shrinkage
process are:
- a considerable migration to the Western
Germany just after re-unification;
- a massive suburbanisation;
- a fall in birth rates and growth in death
rates (Haase et.al. 2007; Florentin, 2008)
University of Aberdeen 1st October 2010
In the early 1990s, the outer city became an
attractive place for investors considering the
absence of planning regulations and
policies. The result has been dispersal of
population to the countryside and outer
skirts of the existing centre (Kroll et.al. 2010)
Urban shrinkage process has slowed down The physical infrastructure of Leipzig was designed
in the beginning of 2000s due to small-scale for a larger population, and with urban shrinkage
immigration and an increase in birth rates. and population decline; this infrastructure has
However, this new situation did not change become considerably large for the current
the physical pattern of urban sprawl population
developed in the 1990s (Bontje, 2004)

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MOLAND (Monitoring Land-use/Cover Dynamics)
• The MOLAND model utilises cellular modelling to the land cover-
which is named as cellular automata (CA) i.e. a set of transition
rules representing the compatibility of land-uses with each other
• The model developed for European urban areas experiencing
major urban change including the Leipzig and Dublin areas has
University of Aberdeen 1st October 2010
two components including regional and urban land-use sub-
models
• Macro-level data such as GDP and population growth are inputs
for the regional sub-model, also affecting the land-use sub-model
which is run through a CA model
• Micro-model parameters i.e. neighbourhood effects,
accessibility, zoning, population, employment indicators etc. can
be utilised to explain the micro-level spatial issues

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Scenario Analysis from the Moland Model: Scenario 1: Hyper-Tech
Population & Economic Trends
-steady population and economic growth
Spatial Development/Planning
- New industrial developments occur between
Leipzig-Halle axis and other towns
- New residential developments are
encouraged in polycentric urban form
Transport
University of Aberdeen 1st October 2010
- Improvement of national roads
- Better links to the motorways and airport
extensions
Overall Trends
- Rapid technology advance-economic growth
- Low environmental protection
- Passive management leading to peri-
urbanisation and ‘metro-polisation’ of rural
area

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Scenario Analysis from the Moland Model: Scenario 2: Compact Development
Population & Economic Trends
-slight population and economic growth
Spatial Development/Planning
- Increases in infrastructure construction (e.g.
demolished houses replaced by partly
housing, partly sports and recreational
activities)
Transport
University of Aberdeen 1st October 2010
Low investment in transportation
- Link to motorway Chemnitz
- Investment in fast railways to Munich,
Berlin and Erfurt (ICE)
Overall Trends
- Moderate economic growth
- High environmental protection (Green ring
map)
- Fragmentation, social exclusion

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Key Impacts and Indicators for the CBA
Impacts/Indicators* Suggested Indicators/Impacts for Quantification of
the Present Study Impacts
1. Direct Impacts of Transportation Infrastructure
Provision: Costs/ Capital Investments of Monetized Impact
-Transportation Facility Land Values Transportation Infrastructure
-Development Costs/ Capital Investments
-Adjacent Property Values
2.Socio-Economic Impacts:
a. Land Development Impacts: Costs of Providing Public Services Monetized Impact
-Green Space Preservation
-Public Service Costs
b. Transportation- Related Impacts:
- Savings in Vehicle Operation Costs Savings in Vehicle Operation Costs Monetized Impact
University of Aberdeen 1st October 2010
- Travel Time Savings
- Reduction in Risk of Accidents/Safety
Travel Time Savings
Savings in Accident Costs
Monetized Impact
Monetized Impact
- Comfort and Convenience
- Traffic Congestion Effects
c. Socio-Economic Development Benefits:
-Affordability (Housing)
-Affordability (Transport)
-Social Inclusion Area Land Values Qualitative/Quantitative
-Socio-Economic Growth Assessment
-Land-Use/Transport Accessibility
-Area Property Values
3. Transport Network Effects:
-Reliability/Quality of Transport Service System Operating Costs Monetized Impact
-System Operating Costs
4. Energy and Environmental Impacts:
- Energy Consumption CO2 Emissions Monetized Impact
-Air/Noise Pollution Exposure Local Air Pollution Monetized Impact
-Climate Change Emissions (Greenhouse Gas Emissions)
Adapted from: Janic (2003); Litman (2008)

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Some Examples from Impact/Indicator Data Requirements
1. Change in For the calculation of the economic benefits (costs) associated with vehicle operating
Road Vehicle costs, two types of data are required:
Operation -Demand: the number of private vehicles (cars) making a particular origin-
Costs destination trip for the hyper-tech scenario and the alternative compact
development scenario ( peak/off-peak traffic flow data for the baseline and
alternative scenarios)
-Vehicle kilometres-total change in vehicle kilometres from the local highway
network for the hyper-tech and compact development cases
University of Aberdeen 1st October 2010
2. Change in Estimates related to;
Travel Time -Travel time-change in travel time for private vehicles (cars) in peak/off-peak traffic
for the baseline hyper-tech and compact development scenarios
-Demand: peak/off-peak traffic flow data for the baseline and compact development
cases
3. Change in CO2 -Total change in greenhouse gas emissions (i.e. CO2 , in particular) for the baseline
Emissions and compact development cases.

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Summary of Impact/Indicator Valuation
IMPACTS/ IMPACT EVALUATION METHODS
INDICATORS
Capital and Evaluation is based on local data availability.
Operation Costs of -Capital cost items for Germany were specified in the Federal Transport Infrastructure Plan
Rapid Rail Provision 2003
-Elements of rail operation costs for Leipzig refer to World Bank (2005) specifications
Costs of Providing Public service provision costs are case specific and could be identified as the:
Public Services ‘costs of road construction, housing and community development, education, fire and police
protection, water and electricity distribution, sewerage, and social and recreational
University of Aberdeen 1st October 2010
facilities’.
Savings in Accident The statistical value of human life (SVHL) has been determined using two methods:
Costs Human capital : measures discounted loss of production due to the injury or death of the
individual member of the workforce
Stated preferences : estimates willingness-to-pay (WTP) values of individuals indicating
their preferences to reduce the risk of being injured or die in an accident
Forecasted Value of Accident Costs was computed for the Leipzig Area based on HEATCO
(2004) analysis.
Savings in Road Road vehicle operation costs are correlated with road design standard, road maintenance
Vehicle Operation strategy, environmental impacts, the composition of the traffic flow, and road
Costs congestion. However, the operating cost relationships for road vehicles is
more generic and transferable between countries (HEATCO, 2004). This
study is based on the adjusted parameter values which are derived from
external sources.

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Summary of Impact/Indicator Valuation
IMPACTS/ IMPACT EVALUATION METHODS
INDICATORS
Travel Time Savings The cost saving approach, which considers wage rates as a measure of productivity loss or
gain by the labour force, is selected as a minimum approach for the valuation of work time
savings (Federal Statistical Office, 2010). For the non-work time valuation, the values
obtained from HEATCO (2004) can be considered for the Leipzig case. These values were
derived specifically for Germany for the year 2002 by utilising a meta-analysis approach.
Climate Change Costs related to the emissions of CO2 are evaluated on a global scale rather than location
University of Aberdeen 1st October 2010
specific evaluations. A cost factor reflecting the average shadow value will be used for
valuing CO2 emissions (see Kuik et.al. 2007).
Local Air Pollution Considering the absence of local data concerning costs of local air pollution in the Leipzig
Region, this research utilised the country specific cost factors for Germany, which were
developed in one of the EU-projects (i.e. HEATCO, 2006) for the monetary valuation of
local air pollution.

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CBA Formula representing the Economic Net Present Value
n
(b0 − c0 ) (b1 − c1 ) (bn − cn )
ENPV= ∑at St = + + ...+
t =0 (1+ r) (1+ r)
0 1
(1+ r)n
Where St is balance of cash flow funds comprising flow of benefits, , and flow of costs, ; is discount factor, is
discount rate, and n is the evaluation period (see European Commission Final Report, 2008).
University of Aberdeen 1st October 2010
Benefit-to-Cost Ratio (B/C): the ratio of the discounted aggregate net benefits (i.e. benefits
n minus costs) to the discounted investment costs
∑ [(b )
t =0
t (1 + r ) t ]
B/C = n
∑ [(c )
t =0
t (1 + r ) t ]
Internal Rate of Return (IRR): the rate of discount equating discounted net benefits to
discounted investment costs
n
(bt − ct )
IRR: ∑ t
=0
t =0 (1 + i)

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Stages of Scenario-Based CBA Evaluation Process
University of Aberdeen 1st October 2010

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Conclusions
- In terms of sustainable urban development considerations,
dispersed development in the baseline hyper-tech scenario is less
desirable than compact development scenario since costs of such
development can be expected to exceed the benefits
University of Aberdeen 1st October 2010
- In contrast, compact development policies could achieve
considerable benefits over the baseline hyper-tech scenario by
reducing the negative consequences of urban dispersal i.e. high
costs of public service provision, low accessibility to land-uses and
public transportation modes, increased transport-related
emissions, energy consumption and pollution

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Future Work
- The next stage in the research is to apply a CBA approach to the
scenarios chosen for the Leipzig Region in order to evaluate the two
scenarios of dispersed and compact developments.
- Considering data specifications outlined for the evaluation of the
prioritised impacts/indicators for the1st October 2010
University of Aberdeen Leipzig Area, the related
parameters for the cost-benefit evaluation will be computed with a
final CBA result.
- A further application of this research is to compare the CBA results
of the Leipzig case with those of other European examples. This will
allow the CBA process be used as a policy support tool in discussions
of alternative development policies and investment decisions such as
compact and dispersed developments.

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Thank you...
University of Aberdeen 1st October 2010