Cost-benefit of building resilience in transport systems: What do we know?

By Nancy Vandycke and José Viegas

If there is one thing that we learned from the COVID-19 crisis, it is that we are not living in a linear world where actions cause predictable reactions. In today's world, a small change can be transmitted and amplified by our interconnectedness to have enormous consequences, far beyond the time, place, and scale of the initial perturbation. 

In our last blog, we established the case for integrating "resilience" in the way we think about transport systems. The concept of resilience acknowledges that massive disruptions can and will happen. When those conditions occur, one must deal with them as quickly and effectively as possible, using techniques and systems that solve problems and minimize operations' overall impact. 

Looking at economic and social costs from the COVID-crisis, one cannot stop wondering why system design and plans do not integrate "resilience." A psychologist could say: "The perception of the pandemic risk was not high enough in decision-makers' minds." An economist would respond: it comes down to "costs" outweighing "benefits." We decided to find out what the economic literature had to say about the cost-benefit of resilience. Much to our surprise, we found very little, maybe because the psychologist's view is right. Here is what we think based on what we found. 

Benefits of resilience

The benefits of building "resilience" in transport systems are documented in the context of climate change. They include avoided or reduced losses due to asset unavailability or damage to assets, transport service disruptions, and co-benefits. When it comes down to extreme weather events, the benefits of system resilience are measured in terms of reduced damage to access roads, lower levels of injury and loss of life (safety), and the avoided loss of incomes and livelihoods. As a result, the benefits will become more evident over time based on how much resources are not spent on repairs and disruptions and how these ultimately impact households and sources of livelihoods. 

In the COVID context, we have seen increasing evidence on the cost of service disruptions or interruptions due to physical distancing and mobility confinements (e.g., public transport operators like airlines and transit operators on the brink of bankruptcy; instability of the global supply chains). Many have also seen an opportunity for transport, not just to 'bounce back" and return to the old normal, but to "bounce further" and address other emergencies such as decarbonization of the sector along the way. In that case, building resilience to a global pandemic will generate significant co-benefits (in terms of building back better). 

Costs of resilience

The literature on the costs of resilience is disappointingly light. Most of these literature works focus on the costs that will be incurred today to make assets stronger in the face of physical threats, such as using alternative materials, digging deeper foundations, elevating assets, building flood protection around assets, or adding redundancy into designs. For Miyamoto International (2019), increasing the road's flood resilience through wider diameter drainage pipes or trenches costs a small percentage of the road's value while increasing the railway's flood resilience costs by 50%.

The costs of resilience will also increase if risks and threats require new investments than the business-as-usual scenario. For example, it may include building additional infrastructure (such as barriers to protect roads or railways against changes in flood levels) and upgrading existing infrastructure specifications to meet higher climate thresholds (such as raising road levels or increasing drainage). It could also involve imposing more stringent regulations. For example, airports and airlines put in place new sanitation protocols during the COVID crisis. Cleaning procedures for subway trains and stations and buses had to be upgraded (e.g. with disinfection of frequent touchpoints on subway cars). 

These new policies and protocols had a cost (e.g., increased number of cleaners) for public transport providers already hit by declining revenues from ridership. 

But these cleaning efforts have not been enough to recover lost patronage, as many earlier public transport clients stay away from it for fear of contagion. A resilient urban mobility system should mobilize other vehicles in solutions that would reduce that fear. Many cities worldwide have launched pop-up cycle lanes, which has resulted in growing cycling culture. But more could have been done regarding more robust use of carpooling and ride-hailing. The necessary capital and human resources were already available but not the contractual conditions (and carpooling software).

The COVID crisis revealed another critical dimension: building redundancy in transport networks to avoid disruptions in the global supply chains. Adding redundancy can involve adding routes and modes to maintain services if one route/mode is disturbed by upheavals. The cost of building this redundancy is measured in terms of what part of those resources is idle or underused in normal conditions, and the associated system efficiency losses. Not very different from what happens with the fire trucks in an airport or quick repair teams in complex operations of many types.

Companies operating on an international scale and transporters have fully optimized the production and transport systems under typical conditions in the quest for efficiency. Until today, this model where there is no redundancy has generated significant global and trade benefits. However, it has made our systems extremely vulnerable to risks. This model has substantially increased the number of nodes and links in supply chains. The associated fragmentation of value-adding processes has resulted in chain value being added incrementally in many more locations and more movement of products between these locations, much of it across international borders. This system has also increased companies' dependence on multimodality as no single transport mode can handle the end-to-end journey. Thus, it produces a new set of risk factors associated with coordinating the different methods and the physical transfer of the goods between vehicles, vessels, and aircraft. In a so tightly interconnected system, building redundancy (at the cost of system efficiency losses) could be the price to pay to minimize risk to the global supply chains in the future.

As we continue our journey to guide the "building back better" process, this discussion showed the importance of prioritizing additional research and empirical work on the costs and benefits of building transport systems that are resilient to a diverse set of risks.