Study on Estimation the Benefits of Transportation Investment Project Using the Consumer Surplus Benefit Method

Abstract

The method of calculating benefits in terms of cost-benefit analysis in Korea applies a method of cost-saving benefit analysis. However, as a producer-oriented calculation method, cost-saving benefit analysis is limited in achieving accuracy because it fails to calculate benefits that are not selected as an item and benefits that occur indirectly. Hence, when applied to new modes of transportation that have been recently proposed for adoption, it fails to gain an advantage in terms of cost, and thus, faces the problem of calculating benefits in the form of minuses. Therefore, a method of calculating benefits based on demand function is required to more stably and accurately calculate benefits. The present study applied a user-oriented consumer-surplus benefit analysis method by using the logit model, which is a demand function applied in the modes choice process. The study induced a formula for defining the relationship between the logit model and the demand function and for calculating consumer-surplus benefits. The induced formula is able to calculate accurate benefits if the disparity in consumer surplus before and after implementation is calculated using the area of the demand function. The study made comparisons with cost-saving benefit calculation methods by converting calculated consumer surplus into forms of travel time/travel cost because initially calculated benefits are regarded as a unit of utility for consumer surplus. Furthermore, the study additionally considered benefit items that must be added as system cost items as well as non-choice mode benefit items which cannot be applied during consumer-surplus benefit calculation.