1. Roads Economic Decision Model (RED) January Rodrigo Archondo-Callao Senior Highway Engineer, ETWTR The World Bank

2. RED Objectives Simplify the economic evaluation of low volume roads
Better capture the economic benefits of a project
Characterize the wet and dry seasons separately
Include in the analysis the high level of uncertainty related to low volume roads (risk analysis)
Produce proper sensitivity, switching values, user impacts, and distribution of benefits analyses
Perform budget constraint optimization and multi-criteria analysis

3. RED Development
RED is being developed by the World Bank for the Africa Road Management Initiative (RMI)
RED version 1.0 was released in 1999, version 3.2 was released in 2004
RED is being used at project and network level in many countries worldwide (Nicaragua, Turkey, Ecuador, Chad, Argentina, Ethiopia, Guatemala, Lao, Cambodia, Yemen, South Africa, etc.)
RED version 3.2, 2004, is available at the website:

4. Economic Evaluation of Low Volume Roads
Low Volume Road Versus High Volume Roads (> 300? AADT paved roads: HDM-4 evaluation)
Low Volume Roads Versus Very Low Volume Roads (< 50? AADT unpaved roads: social evaluation, maximize population served per investment, multi-criteria)
Consumer Surplus Approach Versus Producer Surplus Approach (difficult to judge the assumptions made, concern of double counting benefits)
Customized Excel Model Versus HDM Models (HDM-III and HDM-4 models have the same unpaved roads deterioration models, which are not particularly customized for developing countries)

5. RED Characteristics
Constant average level of service over evaluation period
Three options to define levels of service
Two periods during a year: period with and without direct passability (wet and dry seasons)
User defined equations relating road user costs and speeds to roughness
Generated, induced and diverted traffic benefits
Risk analysis with triangular distributions
Budget constraint optimization
Multi-criteria and cost effectiveness analysis

6. a) Constant average level of service over evaluation period

7. HDM-III/HDM-4 Roughness Estimates for Unpaved Roads
Valid for engineered unpaved roads with good maintenance (good drainage). Therefore:
Higher rainfall yields lower roughness
Higher percent of trucks yields lower roughness
Earth roads (finer soils) have lower roughness than gravel roads
In practice, the condition of an unpaved road can be different from what is being predicted by the HDM models

8. b) Three options to define levels of service
b) Speed of a Reference Vehicle
c) Roughness & Speeds of All Vehicles
a) Roughness

9. Vehicle Operating Costs and Speeds Function of Roughness Obtained from HDM-III, HDM-4 or Other Models
Results from HDM (VOC X IRI)
Fitted Cubic Polynomial

10. c) Two periods during a year
Days Per Year
Days Per Year
With Direct Passability
Without Direct Passability
- Different Length
- Different Roughness
- Different Speeds
- Different Traffic
Higher Transport Costs

11. d) User defined equations relating vehicle operating costs and speeds to roughness

12. e) Generated, induced, and diverted traffic benefits
Normal traffic. Traffic without any new investment
Generated traffic. Traffic associated with existing users of the road driving more frequently or driving further than before
Induced traffic. Traffic attracted to the project road from other roads, changing its origin or destination, due to increased economic activity in the road’s zone of influence brought about by the project
Diverted traffic. Traffic that diverts to the project road from an alternative road with the same origin and destination as the project

13. Generated Traffic <> Lower Transport Costs Induced Traffic <> Local Economic Development

14. f) Risks analysis with triangular distributions

15. g) Budget constraint optimization

16. h) Multi-criteria and cost effectiveness analysis

17. RED Excel Software Modules
New
HDM-III Vehicle Operating Costs
HDM-4 Vehicle Operating Costs
Module
Module
RED - HDM-III VOC (version 3.2).XLS
RED - HDM-4 VOC (version 3.2).XLS
Main Economic
Evaluation Module
RED - MAIN (version 3.2).XLS
New
Program Analysis
Risk Analysis
Module
Module
RED - Program (version 3.2).XLS
RED - RISK (version 3.2).XLS

18. What is Next for RED
Further dissemination within the Bank and other Agencies (ongoing)
Preparation of an Applications Guide presenting case studies based on real applications of the model (ongoing)
Deal with cases with no passability
Deal with social benefits
Create a Seniors Executives Module