FINANCIALLY INTERNALIZING PASSENGER RAIL-GENERATED NONUSER BENEFITS

P Schwartz

Document Type

Journal Article

Publication Date

2002

Subject Area

economics - benefits, mode - rail

Keywords

Passenger trains, Nonuser benefits, Incentives, Financial analysis, Emissions credits, Economic analysis, Costs

Abstract

One of the primary challenges facing passenger rail developers today is to bridge the gap between the distinct economic and financial forms of evaluation through which proposals for new or redeveloped rail systems are judged. Of particular importance is the difference in the two methods' treatment of nonuser benefits, which are generally included in economic analysis but excluded from financial evaluation. The use of established tools, such as emissions credits and economic incentive programs (currently used to control industrial air pollution), are proposed as a means of capturing and monetizing nonuser benefits through passenger rail-generated emissions reductions. If this approach is adopted, then passenger rail developers will gain access to a funding source that will offset the costs associated with generating these benefits, thus automatically internalizing the costs within the process of financial evaluation.

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