Economic, Environmental and Social Impact of Changes in Maintenance Spend on Roads in Scotland Summary Report
5 Summary of Quantifiable Impacts
The analysis over a 20 year period compared the savings to Government, through reduced maintenance works activity from budget reductions, with the costs to society in terms of various economic, environmental and social impacts. All figures are quoted at 2002 prices as required by STAG to enable comparison with different studies over time. Further details on the key aspects of the methodology and assumptions are given in Appendix B.
As noted in Section 4, not all impacts can be quantified. The impacts that can be quantified are derived from the effect on road users of predicted network conditions for each of the 3 Scenarios.
The following aspects have been assessed in the analysis:
- Vehicle operating costs. As carriageways deteriorate in condition due to reduced funding, vehicles incur more costs through increased fuel consumption and wear and tear. The results of the analysis confirm the vehicle operating cost increases and show they are the most significant quantifiable cost impact. For the 40% funding reduction Scenario, the total increase in vehicle operating costs, for local roads and trunk roads, discounted over 20 years, is estimated to be more than £3.5 billion. Whilst a large figure, it represents an increase of only around 1% compared with Scenario 1 (Base Case). For this reason, these costs have been the subject of sensitivity testing in this study (see Section 6.3).
- Travel time costs. As carriageways deteriorate in condition, vehicles travel slower and journey times increase. The evidence on which the effect is based is earlier work in the UK and is considered only applicable for higher speed roads. The analysis has therefore only been applied to trunk roads and A class local roads. For this reason, the effect is more significant for the trunk road results.
- Skid related accident costs. Transport Scotland and some Local Authorities monitor skid resistance and apply skid resistance management policies. The justification of such strategies is that skidding accidents increase on lower quality road surfaces in wet conditions. Trends on the trunk road network allowed the effect to be quantified and suggest that, if the aim is to maintain road safety standards as far as possible, then only in the most extreme funding Scenario considered (i.e. a 40% funding reduction) will there be any effect. There was not enough evidence for local roads for the effect to be quantified in this study.
- Delay costs at roadworks. Reductions in roadworks due to funding constraints will generate less disruption to travel. The effect is proportionally more significant on the local road network because maintenance work zones on single carriageway roads cause comparatively more disruption than on multilane highways. Note that delays due to the potential increase in the need for unplanned maintenance, as a result of the reduction in planned maintenance, have not been assessed.
- Lighting related accident costs. The justification for provision of street lights is primarily a reduction in night-time accidents on well lit roads. The effect of budget cuts has therefore been considered by reviewing current accident levels on roads with street lighting, and postulating predicted increases (based on UK evidence) should the lights be switched off. The effect for both the trunk road and local road networks is not significant in comparison with other impacts, but takes no account of other aspects such as the public realm, amenity value and security which are also associated with levels of street lighting, particularly in urban areas. In 2010/11 there were around 2000 night-time accidents on the road network and for the 40% funding reduction Scenario, this figure is estimated to increase by 46 by 2020.
- Emissions costs (global air quality). Reduced maintenance funding leads to less maintenance works activity and therefore lower emissions from maintenance works. There is also less travel through work sites. However, as roads deteriorate, vehicle speeds reduce and fuel consumption and the level of emissions change. Based on the projected model outputs for these impacts, the cost of CO2 emissions has been assessed in accordance with STAG appraisal parameters. Results for all roads show that the biggest reduction in emissions is due to the decrease in roadworks (but note that any potential increase in unplanned maintenance, which has not been assessed, will tend to increase the impact).
Table 5.1 shows the monetised costs and benefits and gives a Net Present Value[5] (NPV) for the maintenance funding reduction scenarios with a 20% funding reduction and a 40% funding reduction compared to the Base Case Scenario for which 2010/11 budgeted maintenance funding levels are retained. The NPV for each Scenario is negative and shows that the overall impact of cuts to road maintenance budgets is an increase in economic welfare cost for Scotland.
The NPV for the full road network (trunk and local roads) for the Scenario with a 40% funding reduction is worse than the Scenario with a 20% funding reduction, showing that greater funding reductions increase the economic welfare cost to Scotland[6].
Asset valuation information is also shown in Table 6. Whilst this is not an impact on society and is a figure used only for financial reporting, it does show that the asset value of the network will decrease with time (due to increases in the accumulated depreciation). This illustrates in financial terms the effect of deterioration in network condition for all three funding Scenarios (including maintaining existing budgets).
|
Cumulative discounted1 costs (£m 20022 Prices) |
Trunk Roads3 | Local Roads3 | All Roads3 | ||||||
|---|---|---|---|---|---|---|---|---|---|
|
Scenario 1 (Base Case) |
Scenario 2 | Scenario 3 |
Scenario 1 (Base Case) |
Scenario 2 | Scenario 3 | Scenario 2 | Scenario 3 | ||
| Financial Costs to Government | |||||||||
| Maintenance works | 2,152 | -266 | -568 | 5,677 | -688 | -1,459 | -954 | -2,027 | |
| Impacts on Society | |||||||||
| Vehicle operating costs | 73,223 | +376 | +625 | 274,246 | +1,485 | +2,966 | +1,861 | +3,591 | |
| Travel time (due to surface condition) | 362 | +57 | +94 | 1,572 | +77 | +158 | +134 | +252 | |
| Accidents (skid related) | 345 | 0 | +21 | N/A | N/A | N/A | 0 | +21 | |
| Delays (at roadworks) | 119 | -25 | -38 | 1,480 | -354 | -712 | -379 | -750 | |
| Lighting (accidents) | 128 | +1 | +2 | 2,155 | +18 | +37 | +19 | +39 | |
| C02 Emissions | 5,765 | -36 | -58 | 14,971 | -14 | -16 | -50 | -74 | |
| Overall impact on society | 79,942 | +373 | +646 | 294,424 | +1,212 | +2,433 | +1,585 | +3,079 | |
| Economic analysis | |||||||||
| Works costs reduction | Base Case | 266 | 568 | Base Case | 688 | 1,459 | 954 | 2,027 | |
| Increase in user costs | Base Case | +373 | +646 | Base Case | 1,212 | 2,433 | 1,585 | 3,079 | |
| Net Present Value4 | Base Case | -107 | -78 | Base Case | -524 | -974 | -631 | -1,052 | |
| Effect on Asset Valuation (undiscounted costs)5 | |||||||||
| Reduction in asset value | -487 | -489 | -531 | -727 | -845 | -961 | -1,334 | -1,492 | |
| Difference compared to Base Case | Base Case | -2 | -44 | Base Case | -118 | -234 | -120 | -278 | |
(1) Annual discount rate = 3.5%.
(2) 2002 prices are 2010 prices factored by 0.81.
(3) Scenario 2 (20% reduction) and Scenario 3 (40% reduction) figures are shown as differences compared to figures for Scenario 1 (2010/11 funding retained).
(4) Negative NPV shows an overall increase in cost (i.e. user costs increase more than the reduction in maintenance expenditure).
(5) Valuation/depreciation information is shown at 2002 undiscounted prices. The information was provided as different parameters for local roads and trunk roads. The 2010 asset value for the trunk road network was estimated at £5,928m. The accumulated depreciation for the local road network in 2010 was estimated at £4,105m.