Make America use CBA again!

What we’ve found so far – using AAA data – is that every mile driven by a car costs the owner $2 to $3. And the “outrageous” California gas tax that everyone keeps whining about is only $0.03 of that. Basically, that’s a pretty ridiculous 1% of the total cost. And it’s an equally ridiculous notion that that 1% pays for all the car-centric infrastructure out there.

“Gasoline taxes and other fees paid by motorists currently cover less than half of the nation’s road construction and maintenance costs.” (Todd Litman)

In addition to the indirect costs that an individual owner/driver pays, there is an additional $1 to $2 per mile called external costs, which are the various cost factors that each driver passes on to society.

Before undertaking any type of project, established companies often conduct a cost-benefit analysis (CBA) based on their specific circumstances. Business plans, budget plans, and project plans must be in place before you start anything bigger than an office birthday party. Even Silicon Valley startups must demonstrate potential financial success if they want access to venture capital. Local governments are different, particularly when it comes to transportation. No Redwood City transportation director has ever conducted a CBA on their projects. That’s pretty clear when you look at how City Hall has handled the big issues of Woodside Interchange, Grand Boulevard Initiative, ferry service, grade separation, or even just the small things like safe routes to school and safe transit routes. Every single one of these project plans would look different if they were conducted through a professional CBA.

The US was once a leader in cost-benefit analysis (CBA) research. Research conducted in the US is widely used and cited by many well-paid outside consultants. But if local authorities don’t base their decisions on research, it’s all wasted effort. Silicon Valley “local control” is very car-centric and doesn’t like public or active transit. You see that in almost every single project. And few “local controllers” show that more than our leaders at SamTrans, the SMCTA board, and of course our RWC council. Every single CBA would force them to put more money into public and active transit. Yet these leaders funnel bike and ADA funds into car-centric projects like “Vera Bike Boulevard” or “Roosevelt Traffic Calming.”

Nowadays, anyone who wants to see truly in-depth research has to travel to foreign and far-away countries such as Canada, Europe or Burkina Faso.

More research, more money

The CBA frameworks that currently exist contain all sorts of imprecision, which is to be expected. First, researchers must decide which externalities to include and second, which cost factor to allocate to those externalities. Sometimes it is easy to focus too much on a cost segment that is readily available, while neglecting or undervaluing others that are not.

Another problem with CBAs is that they can be very localized. The cost of driving can vary due to taxes, fees, insurance, and societal costs. Someone paying bridge tools may be paying more than their fair share, while most San Mateo residents are not. Public transit is even harder to compare because schedules and prices are very local. Walking and biking, on the other hand, are more universal and compare very well across cities, regions, and countries.

Despite its limitations, cost-benefit analysis is a widely used and accepted economic tool for decision-making in the field of transport infrastructure – everywhere but here.

“Highway expansion projects rarely deliver the time savings that politicians promise. Building additional lanes usually leads to more demand, more congestion and higher emissions.” (SSTI 2024)

These are just a few of the many research projects that look in more detail at the issues of internal costs, external costs, social benefits and health savings:

Several researchers, such as Nelson (1995), Buis (2000), Wittink (2001) and Saelensminde (2002), as well as researchers in places such as Bogota, Delhi, Morogoro, the Netherlands and Norway, have concluded that cycling makes a positive contribution to the economy.
Meschik (2012), Rabl and de Nazelle (2012) investigated the costs of switching modes from cars to bicycles.
Stephan Goessling (Copenhagen) and Todd Litman from the Victoria Transportation Policy Institute (VTPI, Canada) have conducted several studies.
2003: The European Environment Agency estimated that 8% of the EU’s GDP (plus Norway and Switzerland) is spent on external transport costs, of which 58% is attributable to cars.
2004: VTPI (Canada) concluded that walking improves urban quality of life, accessibility, transportation costs, health, external costs, efficient land use, economic development and equity.
2008: CE Delft, Infras and Fraunhofer ISI conclude that negative transport externalities in the EU27 (plus Norway and Switzerland) amount to 500 billion euros.
2015: The WHO estimated the cost of road deaths and injuries at around 3% of global GDP
2017: The Lancet Commission calculated that air pollution is responsible for 16% of all deaths worldwide and causes welfare losses of $4.6 trillion, or 6% of GDP.

Quotes from the depths

I’ve read a lot of these research papers so you don’t have to. Depending on who published the study, who conducted it, and—most importantly—who paid for it, the results may be more or less car-related. Yet even the most car-related papers have failed to find any real net benefits to driving personal cars. Essentially, your miles driven are worthless unless they’re reimbursed by the IRS. And thanks to many corporate loopholes, even many of the miles reimbursed by the IRS aren’t net-positive miles. Sure, they have perceived personal value, but we’re discussing societal costs here.

“The cost of keeping each car on the road is 30 times the cost of each bicycle.” (Portland)

Some insights from various essays and articles are worth sharing:

By 2040, investments in the range of $138 million to $605 million will result in health care cost savings of $388 million to $594 million, fuel savings of $143 million to $218 million, and value of statistical lives savings of $7 billion to $12 billion. The benefit-cost ratios for health care and fuel savings range from 3.8 to 1.2 to 1, and are an order of magnitude higher when the “value of statistical lives” is used. (Portland 2011)
In 2011, state and local governments spent $58.7 billion on public transit, $22.7 billion on air transportation, $1.6 billion on parking, and $5.2 billion on ports and water transportation. This generated $13.2 billion in public transit fees, $18.8 billion in air transportation fees, $2.2 billion in parking fees and fines, and $4.2 billion in taxes and fees for water transportation. No mode of transportation was free of subsidies. (Taxfoundation 2014)
Cycling cultures will only evolve if cyclists’ concerns and expectations regarding safety, speed and comfort are taken into account (Aldred 2013).
“Walkable” environments are defined as passable, compact, physically appealing and safe (Forsyth 2015).
Annual internal costs VW Golf = €403,179; Mercedes GLC = €679,167 (Germany 2019)
Annual social costs VW Golf = €4,755; Mercedes GLC = €5,273 (Germany 2019)
Danish bicycle quotas would increase the mobility of England’s poorest by 25% (UK 2014)
Danish cycling quota could save the British health system $17 billion within 20 years (UK 2014)
Bicycle parking requires 8 times less space than a car (UK 2014)
Simply shifting 10% of journeys from car to bicycle would save 400 productive years of life (Great Britain 2014)
A 5 km commute costs society: driving = $2.78, bus = $0.38, walking = -$1.08, cycling = -$0.75. While driving and public transport are heavily subsidised, active transport is a net gain (Vancouver 2015).
For 1 dollar of direct costs, society pays for walking = 0.01 dollars, cycling = 0.08 dollars, bus = 1.50 dollars, car = 9.20 dollars (Vancouver 2015)
Revenues from gasoline taxes and other user fees this year are expected to be $16 billion below the level needed to sustain current federal spending on the transportation sector (US PIRG 2015).
Gasoline taxes and other fees paid by motorists now cover less than 50% of the nation’s road construction and maintenance costs. (US PIRG 2015)
In the 1960s, this figure was 70%.
External costs of the automobile: -500 billion € per year, social benefits of cycling: +24 billion € per year, social benefits of walking: +66 billion € per year (EU 2018)
Every kilometer cycled causes external costs: -0.11 €; every kilometer cycled has a social benefit: +0.18 €; every kilometer walked has an external benefit: +0.37 € (EU 2018)

It is almost impossible to make sense of all these different numbers in different locations. One of the best quotes to sum them all up:

“Gasoline taxes and user fees cover only half of state and local road spending” (Tax Foundation 2014)

And that’s still just the damage to visible infrastructure. It doesn’t include all the damage and costs to society. Why does any jurisdiction justify expanding highways and building new infrastructure for cars today? This is outrageously bad governance. It can only be explained by the fact that two of the most corrupt industries in America today are housing and transportation. It seems that council members across the Bay Area keep chasing the wrong money.

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Editor’s note: The views and opinions expressed in all blog posts are those of the authors and do not necessarily reflect the views of Redwood City Pulse or its staff.