Time value of goods movement for project appraisal in South Korea

The value of time (VOT) estimated with the annual average wage of truck operators and the wage rate (WR) method is currently being applied in South Korea to evaluate the economic feasibility of new roadways. The WR method considers the wage of truck operators, but not the value of the goods being transported. Because there is an obvious difference between the wage of truck operators and the value of goods, the WR method may not properly reflect the VOT for truck travel. The main objectives of the research conducted for this paper were to estimate the VOT for truck travel, using the marginal rate of substitution (MRS) method, and to evaluate the applicability of this method in the economic feasibility study for a new roadway. The results show that the VOT for truck travel estimated using the MRS method with stated preference data is 60.5% higher than that calculated using the WR method. From the results of a recent economic feasibility study for three road types-private highway, expressway, and highway-the benefit-cost ratio calculated using the MRS method is shown to be about 41.3% greater than that obtained using the WR method. These findings suggest that the MRS method is more appropriate for estimating VOT when conducting economic feasibility studies to justify constructing new transportation infrastructure.