Appendix 2: Cost-benefit analysis and accessibility and environment

Appendix 2: Cost-benefit analysis & accessibility and environment

1

In Chapter 2, paras. 116-117, the relationship between three variables—environment, accessibility, and cost—was discussed and expressed in the form of a rough and ready ‘law’: in any environmental area if certain environmental standard is adhered to, the level of accessibility that can be obtained depends on the amount of money that can be spent on physical alterations. But the relationship is complicated by the fact that some schemes and forms of arrangement are more efficient than others, since for a given expenditure of money, some would result in better standards of environment and/or accessibility than others; or, put in another way, given certain minimum environmental standards, the cost of securing a particular level of accessibility will vary with different forms of arrangement of the roads and buildings.

2

Very little is yet known about which forms of arrangement are the most efficient, either in a general sense, or with reference to particular places or problems such as those examined in the four studies described in Chapter III. A technique is needed to enable the three variables to be measured so that the qualities of different designs can be compared, and so that the most efficient kinds of arrangement—road and parking systems, optimum sizes for environmental areas of different densities and so on—can be identified. The data for this comparison can be supplied by a cost-benefit analysis. This Appendix explains how such an analysis can be applied to test efficiency in the sense just explained, using the three alternative schemes for the redevelopment of Newbury central area as examples.

3

Cost-benefit analysis is a technique which has been devised to assist the making of a rational choice between alternatives, particularly public investment alternatives. The problem of choosing between alternative schemes of public expenditure is not novel to local authorities, for it faces them on every hand.
But compared with the private sector, where a promoter can compare schemes in terms of their money costs and returns to him, rational choice in the public sector is difficult, for so often the benefits to be derived are for general use and therefore have no market price. It is primarily to assist such public choice that cost-benefit analysis techniques are being developed⁽¹⁾. They have been used in this country to test road schemes and a London tube railway extension ⁽²⁾.

1. See Alan T. Peacock and D. J. Robertson, Ed., Public Expenditure: Appraisal and Control (London: Oliver and Boyd, 1963).
2. For the application of the analysis to other kinds of traffic proposals see T. M. Coburn, M. E. Beesley and D. J. Reynolds, The London-Birmingham Motorway, Traffic and Economics, Road Research Technical Paper No. 46 (London: HMSO, 1960); D. J. Reynolds, The Assessment of Priority for Road Improvements, Road Research Technical Paper No. 48 (London HMSO, 1960); and C. D. Foster and M. E. Beesley ‘Estimating the social benefit of constructing an underground railway in London’ Journal of the Royal Statistical Society, Series A (General), Vol. 126 (1963), p.46.

4

Two general points need to be made about the nature of the costs and benefits which are analysed. First, as will emerge in the following paragraphs, these are not the same as in conventional highway cost-benefit analysis. The costs relate to initial construction and exclude maintenance; the benefits are those encompassed in the concepts of accessibility and environment (as discussed in Chapter II), and are expressed as indices, not as money savings in terms of vehicle operating costs, time, and avoidance of accidents. But the costs and benefits are similar to those of conventional highway cost-benefit analysis in that only selected aspects are included. If the analysis were made from a comprehensive town planning viewpoint, all conceivable costs and benefits and their effect on all sections of the community would need to be considered⁽³⁾.

3. For an attempt see Nathaniel Lichfield, ‘Cost-Benefit Analysis in City Planning’, Journal of the American Institute of Planners (Vol.26) 1960, p.273; and Lichfield, Cost-Benefit Analysis in Urban Redevelopment Research Report 20, Real Estate Research Pro-gramme, Institute of Business and Economic Research (University of California, Berkeley, U.S.A., 1962).