Prof. Cristina Pronello, Alessia Gaia Ph.D student Politecnico of Torino

1. “Alternative methods and their reliability for the evaluation of transport social cost: an application to an Italian medium-sized city” Prof. Cristina Pronello, Alessia Gaia Ph.D student Politecnico of Torino Department of Hydraulics, Transport and Civil Infrastructures Italy

2. Research Objectives The definition of an innovative methodology for the evaluation of the “good” environment and consequently people WTP for the implementation of the environmental conditions The evaluation of the reliability of this methodology through its application to a case-study

3. Research Background The methods for the economic evaluation of the good “environment” can be grouped in: • Revealed Preferences methods (RP): based on the observation of people behaviour in a real context of choice; • Stated Preferences methods (SP): based on individual response facing hypothetical scenarios; • Dose-response method: based on a physical relation

4. Research Background Limitations of the Revealed Preferences methods: • Difficulty in the specification and inclusion of qualitative variables (comfort, ...) • Impossibility of the inclusion of hypothetical scenarios • The sample could be not representative • Modest capability in describing the relations between the variables • Costs of the databases could be very high

5. Research Background Limitation of the Stated Preferences methods: • Eventually presence of bias. Advantages of the Stated Preferences methods: • Introduction of future alternative or scenarios; • Introduction of qualitative variables; • Possibility of variation of the attributes’ levels; • With an equal cost the sample that could be obtained is bigger; • The data are more “easy to check”.

6. Methodology backgroud In this research we suggest for the evaluation of the “good” environment the possibility to introduce the use of… • the Stated Choices method (SC) In this method people are asked to choose which scenario, made up of a combination of attributes, suits the best with their preferences. Because of this peculiarity it seems that it could be broadly used in environmental research (also a Norwegian study has used this approach).

7. Methodology background The new approach to the environmental cost evaluation expects: the use of “stated preferences method”: • to forecast people behaviour in hypothetical scenarios and consequently • to evaluate people willingness to pay to an improvement in the environmental quality

8. The application of the proposed approach: the Italian case study To evaluate the reliability of the methodology presented we tested it in a real case We choose: • a medium sized city • to implement a traffic policy to decrease the environmental pollution of the city • to close the area of the city centre to the car traffic • to evaluate this scenario through a survey • to use two different techniques to evaluate the “good” environment and then to compare the results

9. The Italian case study: the survey Area of interest of the research: the city of Alessandria (North of Italy) The survey was conducted in autumn 2002 by phone Town’s population was stratified in function of: - zone of residence - type of occupation A sample of 823 people was extracted 690 people were interviewed

10. Questionnaire Design The questionnaire was divided into 3 sections: • Section: characteristics of the mobility (origin, destination, frequency, purpose, etc.) • Section: socio-economic information (sex, age, occupation, etc.) • Section: application of the CV and the SC techniques to evaluate people WTP

11. Questionnaire Design: 3rd Section CV application to evaluate the WTP for air pollution: • “How much are you willing to pay for a real reduction of the 30% for the city air pollution?” Application of the CV to evaluate people WTP for the city’s environmental conditions CV application to evaluate the WTP for noise pollution: • “How much are you willing to pay for a real reduction of the 30% for the city noise pollution?”

12. Questionnaire Design: 3rd Section Application of the SC techniques to evaluate people WTP for the city’s environmental conditions SC application: • 4 different scenarios with 2 alternatives were presented • each alternative was characterized by relevant attributes: - total travel cost - total travel time - proportional decrease of the air pollution - proportional decrease of the noise pollution

13. Questionnaire Design: SC game Example of SC game • Basic idea: “high proportional reductions in environmental pollution imply an higher travel time but a rather lower travel cost” SCENARIO 3 ALTERNATIVE A ALTERNATIVE B % reduction noise 20% % reduction noise 20% % reduction air pollution 0% % reduction air pollution 40% Travel time 35 min. Travel time 50 min. Travel cost 7,5 € Travel cost 4 €

14. WTP Evaluation We obtained 3 different values of WTP depending on the methodology used: • WTP_CV_AIR_POLLUTION expressed in €/year • WTP_CV_NOISE expressed in €/year • WTP_SC expressed in €/year, it is representative of the “quality value of the environment” implicitly given by the interviewed

15. WTP Evaluation The WTP_SC was obtained through the following equation: where: • Ctravel is the total travel cost • Ttravel is the total travel time • punto%AIR_POLLUTION is the envisaged proportional reduction of the air pollution • punto%NOISE_POLLUTION is the envisaged proportional reduction of the noise pollution • WED_FREQUENCY is the weekly travel frequency

16. WTP Evaluation The values obtained from the Contingent Valuation (CV) express respectively: • People WTP for a reduction in the urban air pollution; • People WTP for a reduction in the urban noise pollution. The value obtained from the Stated Choices method (SC) expresses: • WTP for the “global” quality of the urban environment without making any distinction between noise, air pollution and so on.

17. WTP Evaluation The values obtained from the statistical analysis from the three different WTP using the two different methodologies are included between: • - 47 and 277 €/year for the WTP concerning the 30% reduction of the air pollution evaluated using the contingent valuation (CV) • - 31 and 243 €/year for the WTP concerning the 30% reduction of the noise pollution evaluated using the contingent valuation (CV) • - 3196 and 7088 €/year for the WTP evaluated using the stated choices method (SC)

18. Conclusions The values of the social cost of transport reveal significant differences: • The esteem obtained using the SC is considerably bigger than that obtained using the SC; this can be explain with the fact that the value obtained through the SC gives the value assigned by people to the urban environmental quality. We assumed this value representative for the WTP to obtain its improvement. • Both esteems obtained using the CV method are comparable and considerably smaller than that obtained using the SC. This is consistent with what is usually found in research.

19. Conclusions and future developments These results suggest: • With CV people show difficulties in monetary quantification • SC method limits possibility of monetary underestimation • Future work may lead to further investigate the possibility of application of SC technique and people way of reaction to SC application