The Fall and Rise of the I-35W Mississippi River Bridge – Part 5: Economics

At the request of Mn/DOT, shortly after the collapse, Feng Xie and I estimated the Twin Cities 7-county region daily vehicle hours of travel with and without the Bridge using a planning model under two assumptions. The first kept the trip table fixed. This means that people did not change the number of trips, or destinations, in response to the Bridge failure. This should give an upper bound to the effects of the Bridge failure. The second allowed trip destinations to vary (though keeping the number of trips fixed). This provides more of a lower bound of the effects. Clearly some people can switch destinations, or avoid trips altogether, if the cost of their previous destinations are now too high. On the other hand, not everyone can do so. The exact number of people who change destinations is not something we can easily know.

Note, these are direct model outputs, so while the precision is high, the accuracy is not nearly as high as implied by the precision. We monetize these numbers using values of time from MnDOT (The current MnDOT values of time can be found here, a the time the values given were Auto $12.63/hour and Truck $20.41 and we assumed 80 percent auto and 20 percent truck giving a composite value of time of $14.19).

I believe the OIM Value of Time for Trucks is very low, our estimates (Smalkoski, Brian, and David Levinson (2005) Value of Time for Commercial Vehicle Operators. Journal of the Transportation Research Forum. 44:1 89-102.) put the number at closer to $50 per hour. If we used that, we would get a composite value of time of $20.14.

The results in Table below are of course estimates. However, the number is large and positive, which we expect. And the numbers lead us to conclude that letting bridges fall down is bad public policy. Which most of us already knew. The number does have uses aside from (rhetorically) beating people over the head, it tells us, for instance, how much we should reward contractors for early completion.

The problem is that those who benefit from the Bridge (or lose from the absence of the Bridge) differ from those who pay for it, and are responsible for maintaining it. If presented with the choice of paying and keeping the Bridge up and not paying and letting it fall, most users would have gladly paid more than was required to keep the Bridge up.

Scenario Time Trip Table Planning Network
0 (Base) Before N.A. Complete network
1 After Variable Crippled network
2 After Fixed Crippled network
3 After Variable Crippled network with upgrades
4 After Fixed Crippled network with upgrades

VHT Fixed Trip Table Variable Trip Table
with 1,122,342
without 1,134,355 1,131,322
loss 12,013 8,980
Value $/day $170,425 $127,390

We conducted a more thorough analysis later (Xie, Feng and David Levinson (2008) Evaluating the Effects of I-35W Bridge Collapse on Road-Users in the Twin Cities Metropolitan Region. Transportation Planning and Technology 34(7) pp. 691-703.), considering upgrades to alternative routes, such as restriping I-94 to add a lane and upgrading Mn280, with somewhat lower results.

Scenario 0 Scenario 1 Scenario 2 Scenario 3 Scenario 4
Daily VHT (10^6 veh.hrs) 1.427 1.432 (0.35%) 1.442 (1.09%) 1.431 (0.31%) 1.441 (1.00%)
Daily VKT (10^6 veh.kms) 86.53 86.27 (-0.31%) 86.58 (0.05%) 86.27 (-0.30%) 86.58 (0.06%)
Daily Economic loss ($) N.A. 71,466 220,198 62,408 203,409
Ave trip length (kms) 18.82 18.76 (-0.31%) 18.83 (0.05%) 18.76 (-0.30%) 18.83 (0.06%)
Ave trip time (mins) 18.61 18.68 (0.35%) 18.82 (1.09%) 18.67 (0.31%) 18.8 (1.00%)

 

Other Parts in Series: Part 1 – IntroductionPart 2 – StructurePart 3 – CommunicationPart 4 – PoliticsPart 5 – EconomicsPart 6 – TrafficPart 7 – Replacement, Part 8 – Policy Implications


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2 Responses to The Fall and Rise of the I-35W Mississippi River Bridge – Part 5: Economics

  1. John L. Wilson July 31, 2012 at 8:05 am #

    Re: "I believe the OIM Value of Time for Trucks is very low"…

    The update for State Fiscal Year 2013, to be published at the referenced link in a matter of days, values a truck driver-hour at $26.90. This reflects federal guidance dated September 2011.

  2. David Levinson
    David Levinson August 1, 2012 at 2:07 am #

    @John, that's better, it just about covers the drivers wages and benefits, but I still think that is quite low (unless you account for the value of business itself somewhere else). Truck operating costs are also significant, and one could roll those into VoT or treat it separately.