Valuing rural travellers’ time savings

In the economic analysis of transport projects in developed countries, great importance is given to ‘value of time’ savings, that is, how much travel time is saved. In developing countries, however, the practice is much less common, especially for rural projects. This biases investment decisions in favour of urban and inter-urban projects, particularly those that do consider time savings.

Fewstudies have tested how applicable conventional approaches are for estimatingthe value of rural travel time savings in developing countries. This is partlybecause of the low priority routinely given to rural people’s time savings. Tworesearch projects undertaken by IT Transport in Bangladesh, Ghana and Tanzania assessed how far it ispossible to determine value of time savings in rural settings.

Totest rural time values, the projects applied standard methods used in developedcountries. They tested different Preference methods, which look at the trade-offthat travellers make between time spent travelling and money saved. The‘Revealed Preference’ method is based on actual transportation mode choicesmade by travellers. ‘Stated Preference’ gives respondents hypotheticaltransport choices and asks them to state their preference from the givenoptions.

While Revealed Preference is considered more reliable indeveloped countries, this was not the case in these studies. This is becausethe transport options available to rural travellers are very limited andunreliable. Stated Preference, however, produced robust and plausible resultsin all three countries. In addition, the studies showed that:

• Rural travellers do not distinguish between the value of ‘essential’ andsocial/leisure travel time, because leisure trips can be important forcultivating social capital.
• Valuing children’s travel time is important because of the trade-offbetween children’s economic contribution to households and school attendance.
• Women’s value of time rates appear lower than men’s but this may bebecause of cultural reasons.
• Average in-vehicle travel time saving values were estimated at 64 percentof the wage rate in Ghana, 49 percent in Tanzania and 51 percent in Bangladesh.

Estimating value of timesavings in rural communities in developing countries is a valid exercise thatshould be included in transport planning appraisals. Ideally, context-specificresearch should be conducted in every country. However, the study resultsprovide empirical justification for including time saving values in projectappraisal in other countries and broad estimates that can be used where localstudies are not feasible. In addition:

• The Stated Preference technique to estimate ‘willingness to pay’ for timesavings is applicable across poor rural communities in developing countries.
• To usePreference ranking approaches effectively and correctly interpret results, itis essential to develop a thorough understanding of local means of livelihood, therole of transport in the people’s economic and social lives, the balance ofdecision-making and financial powers between genders within households andtravelling habits.
• Valueof time savings studies do not have to be confined to transport projects. Theyare also important for other infrastructure investments such as markets,post-harvest production facilities and water pumps, where travel and waitingtime savings may be a major benefit to users.