MINETA TRANSPORTATION INSTITUTE
This white paper documents the findings from a review of available research literature on the benefits and costs of transit systems in the United States. The primary goals of this research were to 1) identify benefit-cost (b-c) ratio estimates for U.S. transit systems, and 2) identify the main categories of monetized benefits that derive from transit services in the U.S. The assembled data will help planners, advocates and policy-makers by:
- Providing a resource of collected benefit-cost ratios and other quantifiable, monetized benefits of transit,
- Identifying the key monetized benefits of transit that may be of interest to planners, advocates, and policy-makers, and
- Providing a collection of monetized transit benefits that might be useful to researchers seeking ways to advance the methods for quantifying benefits and costs.
A review and analysis of the available b-c ratio estimates for transit systems in the U.S. found wide variation among sources. Some of these differences are attributable to the population sizes and densities of the service areas—the context—with rural and small urban areas generally yielding lower b-c values than urbanized areas.
However, substantial differences remained even after the context was accounted for, suggesting that analysts are using different methods of analysis and that appropriate transit investments in rural and small urban areas can yield benefits substantially greater than costs. The benefits of transit were measurable and strong in a variety of operating environments not just in large cities. Key findings from this review and analysis were:
- Substantial transit benefits in rural and small urban areas: While two studies for rural area transit services found ratios either below or slightly above “1” for every dollar spent (Godavarthy et al. 2014 and Penet 2011), Burkhardt et al. (1998) found values ranging from a respectable 1.67 to a high of 4.22. Further investigations revealed that these substantial differences among studies were due to Burkhardt et al.’s measurement of the economic benefits to riders and transit-dependent populations. These findings suggest that appropriate transit investments in rural and small urban areas can yield benefits substantially higher than costs. Small urban b-c ratios were even better, ranging from 1.23 (Penet 2011) to a remarkable 9.70 for Danbury, Connecticut (Skolnik and Schreiner 1998).
- Transit pays for itself in congestion relief benefits for mid- to large-sized urban areas: According to this report’s analysis of Harford’s (2006) b-c study of transit systems in mid- to large-sized metropolitan areas, congestion relief benefits from transit investments begin to exceed transit costs for metro areas of 2.5 million people or larger.
- Jobs and economic stimulus are among the largest benefit categories from transit investments: Benefits to jobs and the economy were found to be one of the most important categories in the b-c studies reviewed. While these benefits tended to be larger in urbanized areas compared with small urban and rural areas, smaller population areas stand to gain substantially from transit services, with between 40%-46% of total transit benefits attributable to jobs and the economy.
- Transit improves health care access and outcomes while reducing costs: Few of the published b-c studies surveyed for this white paper measured the health care cost benefits of transit. However, Godavarthy et al. (2014) found that giving people low-cost and reliable transit access to medical services decreases the tendency of low-income people living in rural and small urban areas to forgo treatments, thereby improving public health and reducing the costs of health care to society.
- Transit saves people money: While the financial benefits of transit in rural areas are generally low compared with the total costs of transit, small urban areas receive somewhat larger benefits. In addition, transit services in urbanized areas added the most money to peoples’ pocketbooks relative to costs. Overall, this is an important benefit category for transit services.
- Low b-c ratios aside, transit saves lives: The safety and security benefits of transit were low compared with the total costs of transit in the studies reviewed here. However, this paper finds evidence that b-c analysis methods are likely undervaluing the important role transit plays in reducing accidents and injuries and the costs to society from both. In brief, existing analytic methods struggle with properly valuing human life and health in monetary terms. Some argue that transit’s benefits (safety and otherwise) are low because most people choose auto travel over transit. However, this paper presents a brief but compelling argument that this is largely due to a history of underinvestment in transit services in the U.S., coupled with the predominance of auto-oriented land use planning and development.
- Greenhouse gas emissions, air quality, and other important but undervalued transit benefits categories should be considered: This paper concludes that several benefit categories should be considered for research and possible incorporation into future b-c estimation practices. The benefits of transit for fighting climate change through reduced greenhouse gas emissions, reducing dependence on foreign oil, increasing property values, encouraging more compact/transit-oriented development patterns, and improving emergency response services all were found to have received little attention from b-c studies. This is likely due, at least in part, to the lack of research investment in developing the rigorous analytic methods required for reliably and accurately measuring both the costs of these factors to society (climate change being a prominent example) and the benefits transit can yield in these areas. All merit further consideration and attention from policy-makers, academicians, and analyst practitioners.
About the Mineta Transportation Institute
The Mineta Transportation Institute (MTI) conducts research, education, and information and technology transfer, focusing on multimodal surface transportation policy and management issues. It was established by Congress in 1991 as part of the Intermodal Surface Transportation Efficiency Act (ISTEA) and was reauthorized under TEA-21 and again under SAFETEA-LU. The Institute is funded by Congress through the US Department of Transportation’s (DOT) Research and Innovative Technology Administration, by the California Legislature through the Department of Transportation (Caltrans), and by other public and private grants and donations, including grants from the US Department of Homeland Security.