The Option Values Sub-Objective
TAG Unit 3.6.1
June 2003 |
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 Unit
3.6.1 |
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1 The Option
Values Sub-objective
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1.1 Introduction
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1.1.1 |
Option values are recognised by the SRA in
their Appraisal Criteria (SRA, 2003) but in principle
are equally applicable to other public transport modes (bus,
coach, LRT, underground, air), to car ownership, road infrastructure
and to freight facilities. Within the Multi-Modal Studies,
it will be particularly important to consider option values
if the strategies or plans which are being appraised include
measures which will substantially change the availability
of transport services within the study area (e.g. the opening
or closure of a rail service, or the introduction or withdrawal
of weekend buses serving a particular rural area).
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| 1.1.2 |
The idea underlying option values can be explained
using the following example. Consider a strategy or plan which
includes the re-opening of a closed railway line linking a
series of rural towns and villages to a major town or city
that already has a railway service. Even if a particular individual
living in one of the villages along the route does not intend
to use the rail service with any regularity, they may still
value having the option to use the service if they choose.
For example, a car-owner may value the ability to use the
service when for whatever reason they cannot drive or their
car is unavailable. A non-car-owning resident who generally
does not travel beyond the village may value the knowledge
that, should they need to reach the town or city, the facilities
exist for them to do so, at reasonable cost and with a reasonable
level of convenience. In addition, those who do intend to
use the service on a regular basis may also have an option
value, over and above the value of their intended use of the
service, since they too may value the options offered for
rail travel other those already taken account of in their
individual plans and expectations.
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| 1.1.3 |
From this example, it can be seen that: |
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- option values are associated with unexpected use of the
transport facility which is not built into the forecasts
produced by the modelling stage, and would otherwise not
appear in the appraisal as a benefit;
- option values are related to the individual's attitude
to uncertainty - in practice a range of option values is
likely to be found within the population; and
- there is a real risk of double counting, particularly
when trying to separate individuals' willingness to pay
to have the option of using the service from their willingness
to pay for their actual use of the service.
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| 1.1.4 |
Evidence of option values for transport has
been found in two studies in particular (which should also
prove useful as references on methodology): one examining
the removal of a suburban bus service (Bristow et al,
1991) and one examining values placed on the retention of
the Settle-Carlisle rail service (Crockett, 1992). The latter
found values of around 70 pence per week, although the sample
included both users of the service and non-users, and the
latter were found to have significantly lower option values
than the average. In the Multi-Modal Studies, it will be important
(if option values are being estimated) to include both users
and non-users as separate groups within the survey work.
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| 1.1.5 |
Methodologies for calculating option values
and avoiding the double-counting problem noted above are discussed
in an unpublished report to OPRAF entitled Planning Criteria
Research Requirements (ITS, March 1999). For further
details, contact SRA.
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| 1.1.6 |
In presenting the findings, the Qualitative
Impacts column should be used to identify which group of transport
services within a particular strategy (or option) are the
source of any additional (or reduced) option value, the nature
of the change in service and the sign of the change (i.e.
option value gained or lost). The Quantitative column should
be used to indicate the size of the populations affected and
the nature of the analysis used to generate any monetary measures
of total value. The Assessment column should be used to report
the total monetary benefits (or disbenefits) of the option
or strategy being appraised. For consistency with other sub-objectives,
this monetary total should be expressed as a present value,
discounted over the whole appraisal period.
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| 1.1.7 |
For the 'Option values' sub-objective, it is recognised
that it will often not be feasible to carry out the analyses
outlined above, especially in the early stages of developing
an option or when appraising a strategy, rather than a plan.
Therefore an alternative qualitative procedure should be adopted,
outlined in Box 1 below. |
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Box 1
Qualitative procedure for assessing option values
Qualitative scores should relate to the size of the
resident community given options to travel by the strategy,
according to the following scale:
| Community |
Service Withdrawn |
Service Added |
| >2000 people |
Strong adverse |
Strong beneficial |
| 500-1999 people |
Moderate adverse |
Moderate beneficial |
| 1-499 people |
Slight adverse |
Slight beneficial |
| 0 people |
Neutral |
Neutral |
Where more than one community is affected the total
number of resident individuals should be added together
(with a negative sign attached to communities losing
their service).
'Ghost' services not providing reasonable opportunities
for return travel on all days of the week should not
be treated as services for these purposes. Withdrawal
of rail services replaced by bus should be counted as
a withdrawal of service, given the lower level of accessibility
offered to significant groups of users. |
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1.2 Application
of TAG to Highway Schemes
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| 1.2.1 |
The Option Values sub-objective did not
previously appear in DMRB. However, Highway Schemes should be
assessed against this sub-objective using the advice given above. |
2 References
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SRA (2003) Appraisal Criteria - A Guide
to the Appraisal of Support for Passenger and Freight Rail
Services
Bristow AL, Hopkinson PG, Nash CA and Wardman M (1991), Evaluation
of the Use and Non-Use Benefits of Public Transport, Development
of Survey Methodology. Working Papers 309 and 310, Institute
for Transport Studies, University of Leeds.
Crockett, 1992, Should Non-Use Benefits be Included in
Social Cost Benefit Analysis. MA Dissertation, Institute
for Transport Studies, University of Leeds.
ITS (March 1999) entitled Planning Criteria Research
Requirements |
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3 Document
Provenance
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This Transport Analysis Guidance (TAG) Unit
is based on Chapter 7 Section 2 of Guidance on the Methodology
for Multi-Modal Studies Volume 2 (DETR, 2000).
Technical queries and comments on this TAG Unit should be
referred to:
Integrated Transport Economics and Appraisal (ITEA) Division
Department for Transport
Zone 3/08 Great Minster House
76 Marsham Street
London
SW1P 4DR
itea@dft.gsi.gov.uk
Tel 020 7944 6176
Fax 020 7944 2198 |
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