Case Study 1: Providing the evidence base for UK and international transport demand forecasting and appraisal
Submitting InstitutionUniversity of Leeds
Unit of AssessmentCivil and Construction Engineering
Summary Impact TypeEconomic
Research Subject Area(s)
Economics: Applied Economics, Econometrics
Commerce, Management, Tourism and Services: Transportation and Freight Services
Summary of the impact
Research undertaken by the Institute for Transport Studies (ITS) at the
University of Leeds from 1997 to 2013 has played a key role in developing
the methods and evidence base for demand forecasting and economic
appraisal in transport. The primary impact of this research has been
changes to official guidance Manuals, which are prescribed to scheme
promoters, operators, consultants and other agents. In applying these
Manuals, a secondary research impact has been to improve the quality of
transport decision-making and Value for Money (VfM) of public expenditure.
Against this background, ITS Leeds research has achieved the following
impacts throughout the period 2008 to 2013 (and ongoing):
- The UK Department for Transport's WebTAG appraisal guidelines have
specified monetary valuations of travel time savings and traffic noise
directly from our research.
- The UK rail sector's Passenger Demand Forecasting Handbook, which is
the industry Manual, has specified key parameter values directly from
our econometric and review work.
- Extending the reach of the impacts from the UK to worldwide, the ITS
Leeds research has also been exploited in the appraisal processes of the
World Bank and European Commission.
Government, infrastructure providers, regulators and operators, and their
respective agents, require evidence to inform their decision-making
processes. For example:
- strategic business planning is critically dependent upon evidence
concerning the responsiveness (or elasticity) of demand to economic
activity and other external factors;
- routine transport planning is reliant upon estimates of market
responsiveness to attributes such as price, journey time and service
- project appraisal requires not only demand forecasts, but also
valuations of time and other service attributes, to allow economic
evaluation and help determine the social value for money;
- environmental assessment requires values of impacts based on evidence
of willingness to pay.
Through the period 1997 to 2013, ITS Leeds has made notable contributions
to the evidence base on what drives changes to travel demand, and on the
valuation of travel and environmental attributes.
The value of travel time
The single most important parameter in transport appraisal is the value
of travel time savings. In 1998, Wardman was the first academic worldwide
to employ meta-analysis to synthesise and re-evaluate Stated Preference
(SP) and Revealed Preference (RP) valuations of travel times from hundreds
of UK studies; he has systematically updated this analysis as new
valuations have emerged [1; i]. Wardman has also extended the scope of the
meta-analysis work to cover time elasticities as distinct from valuations
, and to derive values of other aspects of service quality such as
punctuality and crowding [iv]. Wardman's results were central to the 2003
ITS Leeds report by Mackie et al. for the Department for Transport [3;
ii], which derived functional relationships between values of time and the
size and sign of time savings, distance and income, and provided the
Department with revised values of time, waiting time multipliers and GDP
As part of the EU-funded HEATCO project (2004-06), ITS Leeds led the
analysis of data and the development of methods to calculate the value of
time savings at a European level. This work was conducted by Shires and de
Jong [4; v], and extended the meta-analysis approach of Wardman from a UK
to a European context. The estimated regression equations were applied to
provide values of travel time for each EU country, by travel purpose and
mode. Such values can be used as best-estimate values for countries where
evidence on values of travel time is lacking; for example, they have been
used in project assessments for Romania and Bulgaria.
Understanding the demand for rail services
ITS Leeds has employed two research methods - namely major reviews and
econometric analysis - in the search for better understanding of the
determinants of rail passenger demand. With regards to the first method,
Wardman has delivered the largest ever meta-analysis of fare elasticities
(2011), as well as reviews of rolling stock (2001) and crowding (2011)
valuations. With regards to the second method, Wardman (2006) estimated
the effect of GDP and other external factors on rail demand [5; iii, iv] -
the GB railway industry had hitherto struggled to understand the growth in
railway demand - whilst Batley (2011) remains the only published study
that has directly estimated the impact of punctuality on rail demand [6;
The environmental value of transport investments
Research led by Nellthorp in 2005 extended the scope of transport
appraisals to include the valuation of environmental impacts from
transport, in the form of road and rail noise. This was collaborative
research involving the Universities of East Anglia (Day) and Loughborough
(Bristow). Nellthorp used a technique called the `benefit transfer method'
which allowed time- and location-specific data from a model of house
prices in Birmingham (provided by Day) to be `generalised' for any
location in the UK at any time. Nellthorp's explicit methods showed that
traffic noise valuations could be incorporated into the economic appraisal
of transport schemes [7; i].
Research team with current title/grade and period of employment
Professor Peter Mackie (L 1970-87; SL 1987-96; Prof 1996-date).
Professor Mark Wardman (RF 1987-88; SRF 1988-97; PRF 1997-99; R
1999-2004; Prof 2004-date).
Dr Richard Batley (RO 2000; RF 2000-02; SRF 2002-07; PRF 2007-date).
Dr John Nellthorp (RO 1996-99; RF 1999-2001; SRF 2001-date).
Professor Gerard de Jong (Visiting Prof 2004-date).
Jeremy Shires (RA 1993-95; RO 1995-99; RF 1999-2007; SRF, 2007-date).
Note: RA, RO & RF = Research Assistant, Officer and Fellow; SRF &
PRF = Senior and Principal Research Fellow; L & SL = Lecturer and
Senior Lecturer; R = Reader; Prof = Professor.
Key grants and funding
i. 1997-2011: DETR/DfT, PI Mackie, Call-off contracts with
DETR/DfT for research and consultancy on traffic appraisal. £750k over 15
years, e.g. RG.TRAN. 442579, 473959, 473245.
ii. 2000-2: DETR, PI Mackie, `Revising the values of work and
non-working time used for transport appraisal and modelling'. £110k,
iii. 2002, 2005, 2009 and 2013: Association of Train Operating Companies
(ATOC), PI Wardman, `Updating the Passenger Demand Forecasting
Handbook'. £80k, e.g. RG.TRAN. 445021, 448215, 101196.
iv. Multiple grants from ATOC, DfT, NAO, RSSB and EPSRC on aspects of
travel quality modelling, PIs Wardman and Batley. £400k,
e.g. RG.TRAN. 474208, 482729, 483748, 485581, 485461, 471902, 480033,
484855, 485440, 478162, 481352, 446958, 460920, 472980.
v. Grants from the EU (2004-6: HEATCO Framework 6 (€110k to Leeds of
€1.3m budget, RG.TRAN. 447876)) and World Bank (2003) (£65k, RG.TRAN.
445963), PI Mackie.
References to the research
1. Wardman, M.R. (2004) `Public transport values of time'. Transport
Policy, 11 (4), pp363-77. doi:10.1016/j.tranpol.2004.05.001
2. Wardman, M.R. (2012) `Review and meta-analysis of UK time
elasticities of travel demand'. Transportation, 39 (3),
3. Mackie, P.J., Wardman, M.R., Fowkes, A.S., Whelan,
G.A., Nellthorp, J., and Bates, J.J. (2003) Value of Travel
Time Savings in the UK. Report to Department for Transport.
Available at: http://eprints.whiterose.ac.uk/2079/2/Value_of_travel_time_savings_in_the_UK_protected.pdf
4. Shires, J.D. and de Jong, G.C. (2009) `An
international meta-analysis of values of travel time savings'. Evaluation
and Program Planning, 32 (4), pp315-325.
5. Wardman, M.R. (2006) `Demand for rail travel and the effects
of external factors'. Transportation Research Part E, 42
(3), pp129-148. doi:10.1016/j.tre.2004.07.003
6. Batley, R.P., Dargay, J.M., and Wardman, M.R.
(2011) `The impact of lateness and reliability on passenger rail demand'.
Transportation Research Part E, 47 (1), pp61-72.
7. Nellthorp, J., Bristow, A.L., and Day, B. (2007) `Introducing
willingness to pay for noise changes into transport appraisal: an
application of benefit transfer'. Transport Reviews, 27
(3), pp327-383. doi:10.1080/01441640601062621
Note: ITS Leeds researchers in bold. References ,  and 
should be judged for research quality; that said, all except  have been
published in international journals with rigorous peer review processes,
whilst  was subject to peer review commissioned by the DfT and has been
widely cited in the other `national' value of time studies (e.g.
Netherlands, Norway and USA).
Details of the impact
The primary impact of this research is official (government and operator)
guidance and policies on transport forecasting and appraisal, both in the
UK and internationally. Consequently, through adoption of these processes,
the ITS Leeds research has contributed to the underlying evidence base and
analysis framework for many high profile practical applications since
2008. The table below is a list of official guidance documents which
contain specific contributions made by ITS Leeds based on the underpinning
research described in Section 2 above.
|| Guidance Manual
|The World Bank
||Economic Evaluation of Transport Projects Toolkit [A]
||Guide to Cost-Benefit Analysis of Investment Projects [B]
|Association of Train Operating Companies
||Passenger Demand Forecasting Handbook (PDFH) [C]
|Department for Transport
WebTAG is the Manual which the appraisal of all UK publicly funded
transport projects is required to follow. Explicit references to the
research cited here are found in Units 3.3.2 and 3.5.6 of WebTAG, and have
been retained in all updates of these units since 2008 [D]. Unit 3.3.2,
regarding appraisal of noise, refers to work by Nellthorp et al.  as
the basis for calculating official values of traffic noise. Mackie et
al.'s report  led directly to the re-setting of official UK appraisal
values for changes in travel time which are still used today; Unit 3.5.6
on the value of travel time refers directly to  stating: "Values
for non-working time are....based on research conducted by ITS for DfT
reported in 2003". Since compliance with WebTAG is mandatory for
major scheme appraisals, the ITS Leeds work has influenced the appraisal
of all major road and transport schemes submitted for funding approval
to/by DfT since 2008; this impact is corroborated by the DfT [E]. When the
DfT undertook the `New Approach to Appraisal (NATA) Refresh' review in
2009, Mackie chaired the Peer Review panel of academics and practitioners.
PDFH and rail industry regulation
The PDFH [C] contains the officially recommended demand forecasting
procedures of the rail industry in Great Britain. Research which leads to
changes to its recommended parameters therefore impacts on real world
decision making. ITS Leeds work on understanding the causes of trends in
rail travel  has underpinned the recommended elasticities to GDP in the
2002, 2005, 2009 and 2013 versions of PDFH. The latest update of PDFH in
2013 also uses generalised journey time (GJT) elasticities from . These
GJT elasticities entail a significant departure from previous values,
impacting upon demand forecasts of changes to not only journey time,
service frequency and through-train provision, but also to other
elasticities derived from the GJT elasticities, such as crowding,
reliability, accessibility to stations and rolling stock. In addition, a
recent ITS Leeds review informed by  has led to major changes in the
parameters used to forecast changes in reliability; these updated
parameters have been implemented within the Office of Rail Regulation's
2013 update to Schedule 8, affecting millions of pounds of compensation
payments concerning train punctuality. Finally, ITS Leeds created the
DfT's Strategic Fares Model, and updated it in 2010 and 2013; this is used
to inform how rail fares in Britain are regulated and was subsequently a
feature of PDFH [iv]. ATOC's letter of corroboration [F] states that: "ITS
has played a leading role in developing the body of evidence and the
framework contained within the PDFH, which is a key component of the
commercial and regulatory framework of the rail sector".
An Illustrative Example - High Speed 2 (HS2)
The valuation and forecasting strands described above come together in
the economic appraisal of the HS2 rail project. The demand forecasting and
economic appraisal of this project has been consciously set up to be
compliant with PDFH and WebTAG. So, for example, the demand growth over
time is influenced by Wardman's work on GDP elasticities , the
modelling of reliability benefits and crowding relief on the West Coast
Main Line by Batley et al. , the valuation of non-work travel time
savings by Mackie et al. , and the valuation of noise by Nellthorp et
al. . These pieces of work undertaken at ITS Leeds all influence the
assessment of value for money of HS2 [G], and research on the value of
travel time is a particular focus of the strategic case for HS2 [H].
World Bank toolkit
The ITS Leeds work for UK government and industry has provided the
foundation for more internationally-focused work which has extended the
reach of the research impacts. In 2003, ITS was commissioned by the World
Bank to develop a transport appraisal toolkit, which draws heavily on ITS
research outputs. This toolkit has been available to consultants around
the world from 2003 to date [A]. The responsible officer in the World Bank
states that the toolkit "...has been instrumental in improving the
quality of economic evaluation in the transport sector in the World
Bank. Over the period 2008-12 there were 261 investment projects
financed by the World Bank either in the transport sector or with a
substantial transport component. These Guidelines made a substantive
contribution to improving the quality of the economic evaluation of
these projects' [I].
European Cost-Benefit Analysis
In 2008, the European Commission adopted its Guide to Cost-Benefit
Analysis of Investment Projects [B], incorporating the methods and values
developed by the HEATCO project. The ITS Leeds research has therefore
served as a reference point for value of time calculations in appraisals
of trans-European network projects. The same values are also recommended
for calculating congestion costs in the `Handbook on estimation of
external costs in the transport sector' [J], co- financed by the European
Sources to corroborate the impact
A. World Bank (2003) Toolkit for the Economic Evaluation of Transport
Projects. Washington DC: World Bank. http://www.its.leeds.ac.uk/projects/WBToolkit/index.htm
B. European Commission, Directorate General Regional Policy (2008). Guide
to Cost-Benefit Analysis of Investment Projects. (see especially Table
C. Association of Train Operating Companies, Passenger Demand Forecasting
Handbook (PDFH, latest version 5.1, 2013). Commercial in confidence.
D. DfT Transport Analysis Guidance (WebTAG) https://www.gov.uk/transport-analysis-guidance-webtag;
see specifically unit 3.3.2 on the noise sub-objective and unit 3.5.6 on
the values of time and vehicle operating costs.
E. Letter of corroboration from the Deputy Director, Transport Appraisal
& Strategic Modelling, DfT.
F. Letter of corroboration from the Manager, Strategy and Franchising
G. HS2 Ltd (2012) The Economic Case for HS2: Value for Money Statement.
(e.g. reference to ITS Leeds research on page 40).
H. HS2 Ltd (2013) The Strategic Case for HS2.
(e.g. references to ITS Leeds research on pages 34, 112 and 113).
I. Letter of corroboration from the Lead Transport Economist, Sustainable
Development Unit, World Bank.
J. Infras, CE Delft, Fraunhofer Gesellschaft and University of Gdansk
(2008) Handbook on estimation of external costs in the transport sector.
Report for the European Commission. http://ec.europa.eu/transport/themes/sustainable/doc/2008_costs_handbook.pdf
(e.g. references to ITS Leeds research on pages 128, 129 and 133).