FrameworkFrameworkaddresses states with addresses states with exceptionally complex issues exceptionally complex issues and a large number of ongoing and a large number of ongoing programs, especially those programs, especially those with local, regional or with local, regional or statewide statutes that include statewide statutes that include crediting programs.crediting programs.

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Why valuation and crediting?

Understanding how to value environmental conditions to include values in planning

Developing credits that reflect values in order to avoid, minimize and compensate for impacts

Planning-level valuation & crediting method

These were then incorporated into a valuation framework and a multi-step

approach from identifying potential environmental impacts to

calculating fiscal equivalencies.

We investigated methods in the literature, the environmental analysis and planning approaches used in California by Caltrans and others, and appropriate geographic scales.

Recommendedapproach

5-step valuation process

Two geographic/planning scales – region and corridor

Incorporate findings into regional system planning, regional project prioritization, and project alternative analysis

Develop capacity within DOTs and clear decision-points to use valuation findings

Implement model valuation project with planners in select districts/regions

economic valueTotal economic value

Use value Non-use value

Direct use Indirect use

Consumptive use

Non-consumptive use

• Timber• Fuel• Fish• Food• Fur, etc.

• Wildlife viewing• Scenic vistas• Boating• Hiking, etc.

• Groundwater recharge• Flood control• Sediment trapping• Carbon sequestration• Habitat provision, etc.

• Existence value• Bequest valueOption value

• Market • Stated preference• Recreation demand• Hedonic • Production function• Averting behaviors

• Averting behaviors• Production function• Stated preference

• Stated preference• Stated preference• Hedonic

Commonly Used Valuation Methods

Examples

valuation scales

Each scale may have unique environmental attributes to measure and consider, but the nested scales provide greater efficiencies in valuation analysis.

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corr

idor

s pro

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ts

Regional scaleRegional scale

Appropriate to analyze certain impacts from the transportation system (e.g. regional biodiversity, air quality).

Corridor scaleCorridor scale

Valuation for corridor of project planning may require higher-resolution analysis of impacts and values.

Approach

Valuation framework incorporating environmental impacts of transportation, valuation steps to calculate equivalent values, and potential uses of valuation data in supporting decisions and calculating credits

Proposed changes in Regional Transportation Plans or Corridor Plans

Impacts: e.g. air/water pollutants, wetland alteration/loss, collisions with wildlife

Impacted systems: e.g. people, wildlife, plants

Impacts on human health, human welfare, environmental conditions

Identify potential impacts

Quantify the impacts

Value the impacts

Assessing environmental impacts

Screen and categorize the impacts

Account for uncertainty

Use credits system to calculate total impact, avoidance/minimization strategy, compensatory actions

Steps in valuation of environmental impacts

Proposed valuation and crediting framework

Calculate credits based on valuation-threshold

relationships

Use credits system to compare project/decision alternatives

DOT guidance handbooks and manuals

State Environmental Requirements categories

NEPA

Other resources (e.g., Victoria Transport Policy Institute; Asian Development Bank)

Step 1: Identify the potential impacts

Step 2: Screen and Categorize the Impacts

Can the effect be assessed and quantified?

Can the effect be quantified and has equivalent fiscal costs/benefits?

Is the impact to be mitigated? •No action

Describe the impact qualitatively

• Assess the impact quantitatively• Can use economic valuation methods (primary or secondary methods) to monetize the impact•Mitigation costs (e.g. engineer costs) to be included in the project cost, corridor or regional plans• May use cost-based methods (e.g. replacement cost) to calculate credit cost

Yes

Yes

Yes

No

No

No

• Assess the impact quantitatively• May use other non-economic evaluation approaches• Compare impacts to desired and undesired thresholds for each type of environmental component• Calculate credits/discredits based on impact magnitude and type

Screening and Categorizing Action

Step 3: Quantify the Conditions & Impacts

• Requires data on potential risks, geographical and temporal extents of the impacts, and severity

• Express the impacts in the physical units to quantify the magnitude of each impact

• Also involve assessing the magnitude of the impacts and impacted elements

• Scientists would need to use models to quantify the impacts

Examples:– Dose-response functions – link expected exposure to stressors

and impacts on receptors– Human health risk assessment models – Ecological risk assessment models– Ecological models

• Physical data would also need to be in a form that is suitable for monetization when analysts carry out an economic valuation study.

Step 4: Calculate Values & Credits for Impacts on Environmental Conditions

Policy guidance (e.g., no wetland loss, air quality standards)

Scientific literature (e.g., habitat fragmentation effects on wildlife)

Output is a pair of targets – desired and undesired

Describe relationship between credits and change in condition

Determine desired and undesired reference conditions/targets

Scientific literature (e.g., linear increase in risk to health from changes in air quality parameters)

Differentiate between relative impact within a study area and total impact

Output is a mathematical relationship defining incremental credits and description of possible uses (e.g., comparison of alternatives, calculating equivalent fiscal cost).

Step 5a: Use credits to calculate relative impacts

Comparison of relative impact to a valued ecological attribute between two theoretical settings alongside a highway. In case (A), the impact is to 3 of 30 area-units of wetland. In case (B) the impact is to 3 of 10. The relative impact is greater in case (B) and arguably should require more credits.

XXX

XXX

A B

Step 5b: Use credits to inform project comparison

Example of using credits to compare among alternatives including structural and modal changes. Credits are calculated based on comparison to desired and undesired conditions.

Alternative Domain Desired Target Undesired Target Credits Total

A. Lane addition; 20,000 AADT increase; short term 5% reduction in travel time, then 5% increase; 10% increase in air pollutants; 40 acres (2%) habitat consumption; 1,200 acres impacted area (60%, traffic noise)

AADT 20,000 reduction 40,000 increase -50 -230

Congestion 20% reduction travel time

20% increase travel time

0

Air quality 10% reduction 10% increase -100

Habitat 10% increase 10% decrease -20

Impact area 0% increase 100% increase -60

B. Light rail system augmentation; 10,000 AADT decrease; long-term 10% reduction in travel time; 5% reduction in air pollutants; 0 acres habitat consumption; 400 acres impacted area (20%, LRT noise)

AADT 20,000 reduction 40,000 increase +50 +130

Congestion 20% reduction travel time

20% increase travel time

+50

Air quality 10% reduction 10% increase +50

Habitat 10% increase 10% decrease 0

Impact area 0% increase 100% increase -20

C. No action; 15,000 AADT increase; 15% increase in travel time; 7.5% increase in air pollutants; 0 acres habitat consumption; 900 acres impacted area (45%, traffic noise)

AADT 20,000 reduction 40,000 increase -38 -233

Congestion 20% reduction travel time

20% increase travel time

-75

Air quality 10% reduction 10% increase -75

Habitat 10% increase 10% decrease 0

Impact area 0% increase 100% increase -45

Step 5c: Fiscal Equivalents of the Conditions & Impacts

Primary methods

Secondary methods

Cost-based methods(not necessarily a strict measure of welfare impact as with the primary methods)

Revealed preference – hedonic model, travel cost model, market price methods, and averting behavior model

Stated preference – contingent valuation, and conjoint analysis

Benefit transfer

Avoided cost, replacement cost and cost of treatment

Credits are calculated as fiscal equivalents, based on one or more of several methods of economic valuation.

Implementation Plan

1) District and HQ system planners, DOT and independent economists and environmental scientists

2) Useful in regional system planning, corridor planning, project alternative selection

3) Develop internal buy-in/capacity, specific guidance for decision-points, use approach in model program

4) Barriers: Broad understanding and acceptance of the approach, capacity, obvious decision-support function

5) Opportunities: Uses existing environmental analysis, can develop regional fiscal equivalencies; model projects available immediately

Possible decision-points for the use of valuation/crediting in planning, programming, and project evaluation

Complement benefit-cost analysis (e.g., Caltrans’ Cal-B/C model) at the programming stage

Possible use of valuation/crediting approach

Source: SACOG MTP 2035 Brochure.

MPO Regional Planning Process

Valuation and crediting information can guide the decision maker in choosing the set of projects to be included in the corridor plan by using values and credits to compare the environmental impacts among the different sets of recommended strategies and projects

Can guide the later selection of which strategies will be developed into projects

Could lead to selection and prioritization of those strategies that avoid or minimize harm to the environment

Use of valuation and crediting in the system planning process

Could be used at the project initiation phase to evaluate the potential environmental impacts associated with each project alternatives, calculate credits/costs among alternatives, and to better estimate the mitigation costs of environmental impacts.

Use of valuation/crediting at the project development stage

The California Transportation Commission (CTC) requires each agency and Caltrans to provide a quantitative and/or qualitative evaluation of the RTIP and ITIP before they are submitted to CTC for incorporation into the STIP.

Caltrans uses Cal-B/C model to evaluate all State Highway projects prior to project submittal to CTC.

Incorporating the values (credits/debits) of the environmental impacts within Cal-B/C at the time of analysis can better account for the benefits and costs that society may have to bear.

To complement the Cal-B/C model at the programming stage

Using credits when talking about equity/fairness

Capacity building within an institution/agency

Resource constraints to implement

Philosophical objection to valuation & crediting approach

Limitations of the valuation/crediting approach

Implementation Next Steps

1) Clearly identify the needs valuation & crediting would meet

2) Clearly identify roles of DOTs/MPOs and external partners

3) Model the approach within a DOT District or MPO Region

4) Use existing environmental analysis for corridor as source of potential impacts, conduct new valuation study for corridor, examine feasibility of using equivalent values elsewhere in the region

More IdeasFollow-on study – before and after valuation of projects

Explore how to incorporate findings into route concept planning

Prior to alternatives being proposed, good place to implement valuation

System planning guidelines from HQ good place for implementation

Questions?

Fraser ShillingRoad Ecology Center

University of California, Davisfmshilling@ucdavis.edu

(530) 752-7859