Roads Economic Decision Model (RED) January 2008 Rodrigo Archondo-Callao Senior Highway Engineer, ETWTR The World Bank

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

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: http://www.worldbank.org/afr/ssatp/Models/RED_3.2/red32_en.htm

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)

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

a) Constant average level of service over evaluation period

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

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

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

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

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

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

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

f) Risks analysis with triangular distributions

g) Budget constraint optimization

h) Multi-criteria and cost effectiveness analysis

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

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