Willingness to Pay for Travel Time Savings on Public Transport: Past Practice, New Evidence and Implications for Policy

ABSTRACT Several significant urban transportation projects implemented in South Africa over the last decade have had disappointing results at odds with ex‐ante and ex‐post economic appraisals of their feasibility. The economic and financial implications are significant and enduring and, in the case of the bus rapid transit (BRT) systems, have resulted in criticism of their value for money proposition. A key input into the economic appraisal of transport schemes is the value of travel time (VTT), which is based on micro‐economic theory of time allocation and derived from users' willingness to pay for travel time savings. This paper contends that the correct valuation of VTT benefits has been under‐researched in South Africa. We review historical values of non‐work–related travel time and compare these with values derived from two types of discrete choice models estimated from a consolidated stated preference dataset from Tshwane, Johannesburg and Ekurhuleni in Gauteng Province, South Africa. An elasticity analysis highlights that the key BRT demand sensitivities are the number of transfers, fare levels and travel time. A mean value of non‐work–related travel time of R13.89/h (currently US$0.80/h) confirms that public transport commuters in South Africa have lower VTTs than previously assumed. These findings are contrary to the characteristics of the BRT systems that have been implemented, which emphasise faster travel times and higher fare levels. The analysis also highlights the significant heterogeneity in VTT across the population because of a combination of taste, mode and income effects. These findings have important implications for public transport system designs and operations, which should emphasise reliable services, minimising transfers and lower fares.