Benefit-Cost Analysis of Value Pricing: Case Study for MnPass - FY10 TechPlan

Principal Investigator(s):

Jason Cao, Professor , Humphrey School of Public Affairs


  • Lee Munnich, Senior Fellow (Retired), Humphrey School of Public Affairs

Project summary:

This project explored the benefits and costs associated with converting the I-394 High Occupancy Vehicle (HOV) lanes to High Occupancy Toll (HOT) lanes. The study focused on the I-394 corridor, with a 10-year timeframe from 2006 to 2015. The benefits included travel time savings, safety benefits, and vehicle operating cost savings, and the costs consisted of capital costs and annual operating costs. Where applicable, the implementation of this study followed the benefit-cost analysis guidance of MnDOT.

This study considered the benefits of both travel time savings and travel time reliability and the valuations of travel time savings and reliability were derived from econometric models for individual driver behavior. HOT lane users choose the lanes because of travel time savings and/or the reliability of the lanes, whereas previous studies considered only travel time savings and exclusively relied on standardized economic value of travel time.

This study estimated safety benefits from crash reduction using the Empirical Bayes method. Previous studies scarcely considered the benefits resulting from the conversion of HOV lanes to HOT lanes. This study also showed that other approaches tended to overstate safety benefits, which highlighted the importance of using a sound methodology.


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