Project: Development of an Evaluation Framework for National Transport Schemes

Reference: R209

Last update: 06/04/2010 17:12:52

Objectives

The main objectives of this work are to develop a framework for evaluation of schemes designed to improve national productivity, covering both process and impact evaluation, considering the following:

Evaluation objectives and research questions;
Evaluation and scheme stakeholders;
Evaluation data collection;
Evaluation design and analytical framework;
Timescales and management structure for the evaluation.

Description

The proposed work is to develop a framework for evaluation of productivity impacts of strategic and inter-urban transport schemes (including Productivity TIF and Crossrail).

The framework will be used to conduct Department-led evaluations of Productivity TIF schemes, Crossrail, and other transport schemes. The evaluation evidence will feed into transport scheme appraisal, thus improving the accuracy of this process.

Contractor(s)

ENTERPRISE LSE LTD
HOUGHTON STREET, LONDON, UK, WC2A 2AE

Contract details

Cost to the Department: £90,000.00

Actual start date: 06 December 2007

Actual completion date: 31 January 2009

Publication(s)

Productivity in transport evaluation studies report
Author: London School of Economics
Publication date: 06/04/2009
Source: DfT website
More information: http://www.dft.gov.uk/pgr/evaluation/evaluationguidance/evalprodimpacts/

Summary of results

  1. The report proposes that the most appropriate measure of productivity gains in the context of transport improvements is Total Factor Productivity (TFP) - i.e. a measure that captures the efficiency with which all inputs (i.e. capital, labour, intermediate goods) combine to produce output (i.e. goods and services). TFP captures the ratio of output to inputs, and can therefore be used to assess differences in productivity across firms or regions, and changes over time.

    Conceptually, TFP improvements are changes associated with shifts in the production function that transforms inputs into output. Transport improvements provide a number of benefits to firms, not all of which are productivity benefits (e.g. changes in the supply of inputs and market for outputs). An evaluation of the productivity impacts of transport should seek to capture TFP and labour productivity effects, along with returns to scale effects (which also provide a potential source of welfare gains from transport improvements), while controlling for the effects of changes in input mix.

    Methods to evaluate productivity impacts of transport
    The strengths and weaknesses of a number of possible approaches to assessing productivity impacts of transport schemes and improvements are discussed. These include methods based on direct estimation of production functions at the micro and macro level, and indirect methods such as using wages and employment data or land prices to estimate changes in productivity.

    The proposed evaluation method aims to capture firm-level changes in productivity before and after a transport improvement. It involves a 'difference in differences' approach, using control groups of firms located in areas unaffected by the transport improvement to provide the counterfactual. Firms in affected and comparator areas would be identified through the construction of accessibility indices for firm locations before and after the transport change (e.g. travel time to a motorway junction). Changes in TFP and scale effects would be measured directly, using standard production function estimation techniques and firm-level longitudinal datasets such as the ONS Annual Respondents Database. This would be supplemented with primary research to provide understanding about how and why businesses have responded to the change.

    However, there will be a trade-off between the geographical scale at which effects can be identified, and the certainty with which those effects can be attributed to a specific scheme. This would need to be further considered empirically as part of any evaluation.