The value of time and external benefits in bicycle cost-benefit analyses

Jonas Eliasson

We estimate the value of time gains, different cycling environments and additional benefits in cost-benefit analysis of cycling investments. Cyclists’ value of travel time savings turns out to be high, considerably higher than the value of time savings on alternative modes. Cyclists also value other improvements highly, such as separated bicycle lanes. As to additional benefits of cycling improvements in the form of health and reduced car traffic, our results do not support the notion that these will be a significant part in a cost-benefit analysis, contrary to some earlier studies and beliefs. As to health effects, cyclists seem to take these largely into account when making their travel choices, so it would be double-counting to add total health benefits to the analysis once the consumer surplus has been correctly calculated. As to reductions in car traffic, our results indicate that the cross-elasticity between car and cycle is low, and hence benefits from traffic reductions will be small. However, the valuations of improved cycling speeds and comfort are so high that it seems likely that improvements for cyclists are cost-effective compared to many other types of investments, without having to invoke second-order, indirect effects. In other words, the bicycle is perfectly able to be viewed as a competitive mode of travel, rather than primarily a means to achieve improved health or reduced car traffic.

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