How much is a life worth?

 

So what will the cost to the economy be of a safer speed limit in residential areas?  

The headline figure that has been estimated is 4.5 Billion. 

It is an arresting figure, but it isn’t really what it seems. 

As part of the Explanatory Memorandum we have to publish we have to produce an estimate of costs and benefits. And we have to use the approach set out in the UK Treasury’s Green Book for evaluating schemes.  

And we have to try and put a financial value to this, but of course there are some things you cannot measure: the grief to a family of a child killed on their street; the social value of meeting neighbors in the street and chatting, the absence of stress from engine noise that is louder in a street with a 30mph limit. 

Those things and more aren’t captured by the Treasury Green Book. 

It measures what it can, and it tries to put a monetary value next to it. And as the Explanatory Memorandum makes clear there is a lot of uncertainty about these figures. 

In transport schemes this is mostly around the estimated value to the economy from journey times. The approach generally assumes that the faster people get places, the better it is for the economy. 

Now that will be true about some journeys, for example deliveries, but not true about others, like visiting your granny.  If I’m a minute late getting to the dentist is that really harming the economy?

Our analysis shows that individual journeys will on average only be affected by one minute, and most journeys affected by less than 2 minutes. Very small and hard to reliably monetize. 

But the Green Book requires us to add up every minute lost and multiplying it by 30 – because the analysis has to cover a 30 year period. And that’s where the figure of 4.5 Billion impact on the economy comes from. 

There's lots it doesn't capture though. The Explanatory Memorandum (p32) says It is important to note that there are a number of wider benefits such as reduced noise pollution, broader impacts health impacts from active travel, increased social interactions, retail spending and land values that are not included in this calculation. Moreover the increases in individuals’ travel time are likely to be small and so there is uncertainty about the opportunity cost of that time.

An estimated impact of 1 min on journey time needs to be set against an average annual reduction of 9 fatalities, 98 serious injuries and 219 slight injuries, and an average annual increase in cycling and walking trips of around 11 million. 

In Spain, where the speed limit on the majority of its roads dropped to 30km/h in 2019, there have been 20% fewer urban road deaths, with fatalities reduced by 34 per cent for cyclists and 24 per cent for pedestrians.

And if you have to put a monetary value on human life we should remember the average cost of a police reported fatality collision in Great Britain is £2.3 million (using 2021 prices) and in Wales there were 28 fatality collisions on 30 mph roads in 2022.

Even the latest version of the Green Book, which we used for our impact assessment, recognises the inherent problem in this kind of approach. It says that ‘Value for Money is a balanced judgement based on the Benefit Cost Ratio which brings together social costs and benefits including public sector costs over the entire life of a proposal, together with decisively significant unquantified deliverables, and un-monetised risks and uncertainties’.

The latest version of our Welsh Transport Appraisal Guidance, published in draft last year, requires the element of the value-for-money assessment based on journey times to be calculated and presented separately to enable decision-makers to take a view as to the relevance and validity of the journey-time element. So that’s what we did for 20mph. And, as the Explanatory Memorandum shows, when you exclude the journey time disbenefits, which as I have explained are contestable, the net present value of the policy is a positive £1.9bn.