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Essay: Cost Benefit Analysis and transport policies (draft)

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  • Published: 15 October 2019*
  • Last Modified: 22 July 2024
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  • Words: 1,068 (approx)
  • Number of pages: 5 (approx)

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The economic growth, employment and well-being are for a very large part dependent on a well-functioning transport system (Goldsby, Iyengar, & Rao, 2014). However, due to an ever increasing demand for transport, congestion has been an increasing problem for urban areas and major highways (Bovy, 2001). Congestion causes welfare losses due to increases in travel time (Oakland, 1972). It is estimated that the cost of congestion in 2014 were between 1,8 and 2,4 billion euros in the Netherlands (KiM, 2015). Furthermore, the environmental impacts of traffic, are cause of serious concern for a more sustainable transport system. It is estimated that transport accounts for 21% to 38% of the total carbon dioxide emissions in the European Union (EU) (Damart & Roy, 2009). Surveys of public opinion in the EU,  show that generally people believe change in the transport sector is necessary, and action is expected with usual levels of support of about 80% (Banister, 2008). It is widely recognized among scholars in the field of transport policy that congestion pricing could be an effective measure to diminish environmental and congestion problems, which at the same time generates a welfare surplus (Gärling et al., 2002; Owens, 1995; Rouwendal & Verhoef, 2006). However, despite this public agreement on the need for action, and the acknowledged effectiveness of congestion pricing, the implementation of the measure throughout the EU has been rather slow and limited (Sørensen et. al., 2014). Ultimately this has to do with a lack of public acceptability. So there seems to be a discrepancy between what people believe, and how they react when measures are proposed. An often-heard argument is that measures are perceived to be unfair. In spatial-infrastructure projects, Cost Benefit Analysis (CBA) is a widely used ex ante evaluation tool for decision making. Although praised for its ability to provide an integral overview of the estimated costs and benefits of alternative plans, by translating their effects as much as possible into monetary terms, it is also heavily contested for a number of aspects, amongst which most commonly heard; the lack to address equity principles. A fair bit of scientific effort has been put in describing equity implications regarding to the use CBA such as Beukers, Bertolini, & Te Brömmelstroet (2012), van Wee (2012) and Hansson (2007). This paper however, takes a different perspective on the principles of equity, namely those derived from energy justice. Taking this perspective, this paper aims to examine the cause for the lack of public acceptance by investigating the implications of the CBA appraisal method according to its: (i) procedural justice, (ii) distributional justice, and (iii) justice by recognition. It does so by a applying a CBA in a case study on a congestion charging policy measure, contemplated by the municipality of Amsterdam. With it, this paper aims to answer the question ‘How can the notion of justice in CBA be used in order to increase public acceptance of transport policies?’

Fist the theoretical background of environmental justice is provided in order to come to a deeper understanding of the justice principles. Then the results of the case study are presented. Important aspects in relation to the policy implication are then discussed, followed by a conclusion and discussion.

1. Theoretical background: Environmental Justice

Justice in decision making is central to the well-functioning of society particularly when decisions are made that benefit some people at the (perceived) expense of others. Energy justice has emerged in the latest decades, receiving more and more attention in the field of energy policy, as a response to the notion that environmental harms are often disproportionally distributed among people, time and location (Walker, 2009). Primarily it was only focused at addressing the disparate distribution, but Schlosberg (2001) added two attributes to the notion of environmental justice, namely procedural justice (the notion of a fair decision making process) and justice as recognition (moral need of groups to create and maintain their collective identity in an autonomous way). The three principles will be used as a frame to identify and tackle injustice in the case study. In order to do so one has to first (a) identify the distribution of the benefits and burdens – distribution, then (b) identify who it affects and who is ignored – recognition, and finally (c) identify the fairness of the process – procedure. A more comprehensive overview of each principle resulting in the criteria to be assessed in the case study are given below.

2.1. Distributional justice

Energy justice demands decision-makers to implement equitable actions in the world. In order to achieve the goal of justice, decision-makers must be blind to partiality and political bargaining, and must weigh benefits and costs empirically and objectively – making justice in this sense a matter of maintaining or restoring balance and proportion (Sovacool & Dworkin, 2014). The principle of distribution justice can be categorized along three criteria.

– Income

– Location

– Time

2.2. Recognition justice

Recognition justice states that “individuals must be fairly represented, that they must be free from physical threats and that they must be offered complete and equal political right” (Jenkins et. al., 2016). A lack of recognition can occur as various forms of cultural and political domination, insults, degradation and devaluation. It may manifest itself not only as a failure to recognize, but also as misrecognizing—a distortion of people’s views that may appear demeaning or contemptible.

– Cultural domination

– Non-recognition (invisibility of people and their concerns),

– Disrespect and stereotyping (through disparaging language)

– Undermining of basic liberties

1.3. Procedural justice

Procedural justice refers to fairness in the decision-making processes for the allocation of resources. It is concerned with how decisions are made in the pursuit of social goals, or who is involved and has influence in decision-making. It can be measures by six criteria:

– The involvement of all parties that are affected

– Equal treatment of persons and situations

– The absence of self interest

– Full and correct information

– The possibility to retract decisions

– Adherence to elementary moral and ethical values

Case study on Congestion Charging

The case study is based on the proposed congestion charging policy for Amsterdam. Currently there is no such policy in place. The city contemplates four alternatives, differentiated in price and time. The appraised costs of the project involve the investment costs, operational costs and welfare losses resulting from a reduction in trips. The benefits are: the income of charged travelers, reduction of deaths and casualties as a result of improved traffic safety, direct and indirect travel time savings and emission reduction.

Where are the injustices?

Who is ignored?

Is there fair process?

Policy implication

Make CBA assumptions understandable to those that are affected.

Conclusions & discussion

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