How option value can be used in public transport

What is the option value, and how can the concept be used for planning and evaluation of public transport? Anders Bondemark WSP and Erik Johansson from K2 and Lund University writes about this in a new report, which is the result of new research at K2.

Option values could easily be described as a form of insurance - a risk premium or backup - facing uncertainty about future travelers. How do we value the knowledge that the public transport service is available, for their own and others' potential use?

The authors of the report, make a review of 11 international studies, which in different ways have examined the option values in transport economy. The authors think that there are some methodological flaws in the studies, in particular, they note that the used measures of availability has major shortcomings.

Increase the use of the option value?

- We wanted to evaluate if it is of interest to increase the use of the concept of option value in public transport. In our study we have a theoretical discussion of the option value: how it has been used and could be used. Also we propose a way forward. You can see our work as a basis for further research in this area, says Erik Johansson, PhD at K2 and at Lund University.

Anders Bondemark är en av forskarna bakom studien

Anders Bondemark hopes that the report will lead to increased knowledge:

- We have developed a theoretical model, and sketched out a method that could be used to study the option value, using a better measure of the geographical availability. It would obviously be great to test the method, for example, to better understand how travelers evaluate this measure. A traveler who does not have access to a car is probably going to value nearness to public transport higher than someone who has access to a car. Based on our theoretical model, one can point to where it is relevant to account the option value and not, he says.

Advanced studies, since new methods

None of the above 11 studies is conducted in Sweden. What Anders and Erik have done so far can be seen as a first step towards a Swedish model to use the concept of option value in the public transport. Something they both see as the next steps are in-depth studies. 

Erik Johansson är doktorand vid K2 Foto: Kennet Ruona

- We want to see a stronger link between the supply and availability of the option value. And in further studies and planning of traveling we also want to include potential travelers, and not only take actual traveling in account. I hope that the ideas we bring even lead to tools and methods for traffic planners, says Erik Johansson.

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