Cost-Benefit Analysis and Model Preference of Public Transportation in Can Tho City, Vietnam

Abstract

Bus rapid transit (BRT) systems are cost-effective and efficient transport systems in high-density urban centers. Given the high level of traffic congestion and air pollution in Vietnam, the introduction of BRT is significant due to the ever-growing number of motor vehicles in the country. In this study, we look at the economic viability of BRT in the city of Can Tho. The study adds to the literature on a developing country’s content by calculating the costs and benefits of BRT. A feature of the study is the calculation of the benefits by estimating motorists’ willingness to pay for the shift from motor vehicles to BRT. The results show that the benefits of reducing accident risk, reducing pollution emissions, and avoiding other adverse effects are adequate to offset the costs. Due to its adaptability, BRT is an excellent candidate for consideration in a wide variety of other conventional vehicles. When the local government lacks the financial resources necessary to execute BRT, the choice to invest in BRT may be anchored on the public’s willingness to pay. Therefore, if government implementation seems unfeasible, private partners may engage in its development. This research contributes to the growing literature on implementing BRT projects and the WTP approach by examining the project’s benefits and costs and addressing potential needs.

1. Introduction

Rapid population expansion in the early twenty-first century has negatively impacted socioeconomic conditions and environmental quality, particularly in urban regions. If urban transportation issues such as congestion, accidents, and air pollution are not addressed, they will harm the environment and human health [1,2,3,4]. Therefore, local authorities’ efforts must focus on improving the urban infrastructure with more sustainable public transportation systems. Pojani and Stead [5] said that when contemplating public transportation expenditures in small or medium-sized developing cities, a prime aim should be enhancing current bus systems. Sustainable urban transportation infrastructure is a significant challenge for countries around the world. The rapid growth of motor vehicle transport in developing Asian nations, especially in Vietnam, is partially due to the inadequacies of current public transportation systems and poses a significant challenge to planning authorities and policymakers [6]. Notably, the number of motorcycles on the road in Vietnam was about 47 million units in 2021 [7] and is expected to reach approximately 57 million units in 2025, according to the National Traffic Safety Committee estimation.

In Vietnam’s two largest cities, Hanoi and Ho Chi Minh City—HCMC, it is estimated that motorcycles account for between 86 percent and 95 percent of the traffic flow [6,7,8]. Can Tho is the fourth biggest city in Vietnam and the Mekong River Delta, covering 1439 square kilometers and having 1,246,993 residents [9]. According to the Can Tho City [10], currently, the city has more than 800,000 motorbikes and more than 40,000 cars registered for circulation, and a huge number of vehicles from other localities to the city. Every day, more personal vehicles are introduced onto already crowded roadways, increasing air pollution and the risk of traffic accidents. The number of personal automobiles employing internal combustion engines with unregulated emissions has also increased, greatly polluting the environment [11]. About 80 percent of transport emissions come from transport vehicles, mainly in emerging economies. After issuing compulsory motorcycle helmet laws in Vietnam in 2007, motor-related injuries and deaths have decreased, however, this issue is still one of the main challenges in Vietnam [12]. In addition, traffic congestion is also a major problem in the big cities’ urban transportation systems in Vietnam, and the development of public transport systems may help to solve this problem [13]. Meanwhile, the government has just issued Decree 48 in 2022 to strengthen and ensure the implementation of traffic order and safety and prevent traffic congestion. In the period from 2022 to 2025, five major cities including Hanoi, Ho Chi Minh City, Hai Phong, Da Nang, and Can Tho are required to limit or stop the operation of motorbikes in some districts after 2030.

Meanwhile, public transportation in Can Tho’s metropolitan districts serves only slightly more than 1 percent of the city’s travel demand. Existing buses are too old, with an average vehicle life of 13 years, even though there have been some improvements and investments from the local government [10]. Thus, prioritizing a low-cost, highly efficient mass transit system would be a sustainable solution to Can Tho’s increasing urban transportation problems.

Therefore, an essential trend, present both globally and in Vietnam specifically, is the transition to BRT [14] in order to preserve the environment and reduce accidents. There are numerous analyses of the effectiveness of BRT systems that have been implemented a few years ago in the literature. Bus rapid transit (BRT) is far more dependable, convenient, and quick than ordinary bus services because of the attributes it shares with light rail and metro systems. The BRT system has many advantages, including shorter commute times, lower pollution emissions, more traffic safety, and more physical activities. BRT has, therefore, drawn a lot of attention in developing nations because it can help to improve the circumstances for transportation and mobility in large cities, consequently reducing air pollution emissions [15]. Moreover, BRT provides travelers with premium services at reasonable prices [16]. In another study, [17] found that using BRT in urban South Africa can result in a healthier way of life.

The purpose of this research is to (i) determine the economic viability of a proposed BRT pilot project using a cost-benefit analysis and (ii) ascertain if BRT is socially desirable by estimating Can Tho residents’ WTP to convert from a motorcycle to a BRT system using the contingent valuation method (CVM). Knowing the highest price people are prepared to pay for BRT has broad policy implications, particularly at the fare-setting stage. Additionally, we estimate a regression model to examine the variables that influence residents’ willingness to pay (WTP). The anticipated outcome of this research is to provide critical information to assess the economic viability of BRT projects in small and emerging developing cities across southeast Asia. The research adds to the body of knowledge on the economic advantages of BRT using a cost-benefit analysis (CBA) and estimating the WTP for switching from motorcycles. Finally, the research evaluates any WTP value discrepancies between traditional CVM and inferred valuation 1 and 2 using the WTP values [18] to suggest possible private investment in BRT in developing countries with limited public financing.

Finally, this research emphasizes the need to incorporate environmental and economic considerations into choices on air pollution-related measures and instruments, such as public transportation initiatives. The literature also shows that there has been a minimal user-focused study on BRT systems [19]. As a result, our study adds to the existing literature on CBA for a BRT project by being the first to use a system that closely resembles the actual project and is validated using the WTP method.

2. Methods of Analysis

Bus rapid transit (BRT) systems have been implemented in over 44 cities in Asia, transporting approximately 9.5 million passengers daily along 1624 kilometers of routes [20]. Can Tho City government officials have been searching for alternatives to decrease private vehicle use and invest in less polluting modes of public transportation to alleviate air pollution and traffic congestion and BRT has been considered and recommended by several international organizations [21]. Can Tho’s BRT option (proposed from Can Tho Airport to Cai Rang Bus Station) has been approved by The World Bank (WB), Schweizerische Eidgenossenschaft Confédération Suisse Confederazione Svizzera Confederazione (SECO), the Korea Institute for Advancement of Technology (KIAT), and the Cities Development Initiative for Asia (CDIA) and is expected to be implemented [22]. In terms of the economic analysis, cost classifications have been provided, although the full range of benefits has yet to be quantified. This includes the reduction in the number of private vehicles in the city, their aggregate emissions, and the associated health risks to the community associated with air pollution.

Several studies have been conducted worldwide to determine the viability of the BRT project [23], for example, examined the Madison metropolitan area’s express bus initiative. Two alternative projects, Transportation 2020 (BRT 2020) and Transportation 2020 (BRT Plus), were compared. In addition, BRT projects have been suggested in Mexico City (Instituto Nacional Ecologia (INE), 2005) and the Philippines (AGT tram system) [24]. In general, the benefit categories included decreased travel time for existing bus system users, lower operating expenses for new bus system users, reduced pollutants, and the reduced risk of motor vehicle accidents and associated costs. The costs categories include construction expenses, operation, maintenance costs, and the cost of local revenue mobilization.

Estimated a negative net benefit [23] of USD 261 million over 30 years in terms of net revenues. The BRT Plus project resulted in a net loss of USD 153 million during the same time. Other projects generate positive net revenue while eliminating 280,000 tons of CO₂, and saving approximately two million travel hours per year [25], or by replacing approximately one million motorcycles per day and preventing the release of approximately 40,000 tons of CO₂ emissions into the environment [26]. Sensitivity analysis and Monte Carlo analysis on the net benefit value components then conducted [23]. Concerning the discount rate, each study used a different baseline scenario based on particular circumstances, i.e., 12 percent from [24]. However, the majority of the research has not calculated the values necessary to compare them to the costs and advantages of BRT from the viewpoints of users, particularly motorists, from which we can extrapolate the cost of suggested policy implications.

2.1. Survey of Road Users

To assist in valuing this BRT option for Can Tho City, a survey of road users was developed. The following criteria were used to determine the respondents and their corresponding WTP for BRT. Respondents must have been residents of Can Tho’s central districts and use motorcycles as their primary mode of transportation. Based on this, 150 residents that travel to work every day on motorcycles were surveyed using a stratified random sampling technique, with the sample size identified by the function used in [27] for regression analysis. The questionnaire included respondents’ socio-economic characteristics, their perception of private and public transportation, and their willingness to pay for utilizing BRT as their primary mode of transportation rather than a motorcycle. The respondents were provided with a scenario where the local government is on the verge of implementing a BRT system. In this situation, motorists were given a closed-ended question about their willingness to pay for a single trip. The questionnaire was developed and pre-tested utilizing open-ended questions with 30 randomly chosen motorists. Then, for single trip bids, the following prices were chosen: VND9000 (0.39 USD); 11,000 (0.48 USD); 13,000 (0.57 USD); 15,000 (0.66 USD); and 17,000 (0.74 USD). These bids were based on several focus group discussions with employees from the local department of transportation and residents from survey regions and are based on traditional bus tickets (the suggested BRT ticket is higher than the traditional one by 20 percent).

2.2. Cost-Benefit Analysis of BRT in Can Tho

2.2.1. Measuring the Advantages and Costs of BRT in Vietnam

A cost-benefit analysis (CBA) was performed to identify the most cost-effective and beneficial project management approach. The International Records Management Trust (2006) guidelines for the CBA describe it as a systematic process for estimating the strengths and weaknesses of alternative technologies that satisfy investors’ requirements. The CBA serves two main purposes (i) to determine whether the benefits of an investment decision outweigh the costs, and by how much; and (ii) to provide a basis for project comparison. The aim of a CBA is to quantify the financial costs and benefits of a proposed project, plan, or policy. The key criterion of this approach is that a project should be accepted if the total of discounted expected benefits exceeds the sum of discounted expected expenses. The CBA is a time-tested and valuable method for social decision-making and facilitating a more efficient allocation of society resources [28,29].

2.2.2. Analyzing the Economic Efficiency of Can Tho’s Pilot BRT Project

In this study, the benefits adapted from previous studies and experts from the local Department of Transportation include time savings, lower motorcycle operating costs, lower external costs (including pollution, the environment, and traffic accidents), cost savings for diseases caused by PM10 fine dust exposure, and ticket revenue from the BRT system. In terms of cost, this study will analyze the detailed project’s investment expenses, including infrastructure construction costs and vehicle acquisition costs, as well as operation and maintenance costs.

2.2.3. Net Present Value (NPV) Decision Criteria

The net benefit of the project (NPV) is calculated by the difference between the discounted benefits and discounted project costs. The formula is as follows:

$$NPV={\displaystyle \sum _{t=0}^T\frac{(B_t-C_t)}{{(1+r)}^t}}$$

where NPV is the net present value of the project in t years; t is the time used to calculate the cash flow over the years; and T is the total project duration (in this case, T is 12 years as the average vehicle life cycle is ten years and the average construction time for the BRT system is two years). The project benefits in year t are denoted B_t, C_t is the project’s costs in year t, and r represents the discount rate (Vietcombank, the Joint Stock Commercial Bank for Foreign Trade of Vietnam interest rate for 12 months is 6.8 percent). If the discounted benefits of the project exceed or equal the discounted cost (NPV ≥ 0), the project is economically viable; if the project’s cost exceeds its benefits (NPV < 0), the project is not economically viable. In this instance, the project does not go ahead as the costs exceed the expected benefits.

2.2.4. The Cost Categories

(1)

Implementation: Implimentation expenses include infrastructure development and vehicle acquisition. Infrastructure development includes building expenditures which involve the design phase, constructing the bus stations, modifying roads, and installing signaling and automatic ticketing systems. The investment cost of the project is calculated as the total investment cost per kilometer (USD 2.4 million/km) multiplied by the 15 km route length. The vehicle expenses are estimated by multiplying the price of the BRT vehicle by the minimum total number of vehicles required. The pricing of the BRT is taken from the Hanoi BRT price list (USD 214,504/vehicle). The cost of investing in BRT varies between USD 1.4 million/km (Jakarta) and USD 12.5 million/km (Bogotá). A BRT system that requires only minimal road infrastructure improvements costs approximately USD 1.4 to 3.5 million/km. When the infrastructure involves the construction of new pavement for the dual bus lanes, the investment ranges from USD 3.8 to 12.5 million/km.

(2)

Operations costs: The running costs of the project include labor and fuel expenditures. Labor costs are computed using MVA Asia’s Metro No. 2 system in conjunction with the labor wage standards applicable to personnel working in public transportation (Regulation 26/2015/TT BLĐTBXH). According to the World Bank, the labor cost of the system is estimated by multiplying the annual salary of employees by the number of employees in each vehicle and by the total number of vehicles in the system. The fuel cost is estimated by multiplying the price of gasoline per kilometer by the total number of operating kilometers per day multiplied by the total number of vehicles multiplied by the number of active days per year. The fuel price per kilometer is derived by multiplying the amount of gasoline consumed by the system for each kilometer (0.29 L/km) by the current fuel price per liter (USD 0.73/L, based on the Website of Petrolimex Petroleum Company on 26 June 2021). The total number of active kilometers per day is the number of active kilometers per hour (at a speed of 22 km/h) multiplied by the number of operational hours per day, or the number of working days in 360 days, excluding public holidays. After comparing it to the fuel consumption norm, the analysis adopts the BRT fuel consumption standard of 0.29 L/km [7]. The standard for the BRT system is between 0.26 and 0.275 L/km, whereas the average fuel consumption for large buses is 27 to 30.6 L/100 km (according to Circular 65/2014/TT-BGTVT released by the Vietnam Ministry of Transport). Fuel consumption depends on the system’s movement and the amount of traffic in the city, and it might grow by 3 percent to 5 percent. As a result, the project’s fuel usage at the higher end, 0.29 L/km is considered acceptable.

(3)

Maintenance costs: The overall cost of infrastructure maintenance, road maintenance, station maintenance, information system maintenance, signal light maintenance, and ticket system maintenance, as well as other maintenance expenditures, is used to calculate the cost of project maintenance and repair (tire costs, lubricant, and vehicle system maintenance). The additional maintenance cost equals the maintenance cost per kilometer multiplied by the system’s annual operational kilometers [23].

2.2.5. The Benefits Categories

(1)

Reduction in travel time costs: As the BRT system’s running costs are less than those of existing motorcycles and buses, the analysis uses the operating costs of a motorcycle and a traditional bus compared to BRT. Therefore we are interested in evaluating the savings that may be realized. When a group of motorcyclists agrees to switch to BRT, the cost-saving associated with operating a motorcycle, such as gasoline and oil, is calculated using the formula of the motorcycle operating cost multiplied by the number of passengers traveling the same route as the BRT. This is similar to a previous analysis where the operating costs accounted for about 33 percent of the full economic benefit of a BRT project in Latin America [30]. The motorcycle operating costs are used in the World Bank’s road cost analysis model.

(2)

Cost savings for vehicle users: The time savings are calculated on the basis of the BRT system’s average operating speed being quicker than that of a motorcycle (the average speed in the inner city is only 14–16 km/h) [30]. The BRT system has its own lane and operates on a priority signal light system while sharing a route with large trucks and other vehicles, making it more convenient than motorcycle travel. The time savings are computed as the value of the motorcyclist’s time per minute saved multiplied by the total number of passengers switching from motorcycles to BRT. The time value is deduced from the Can Tho City minimum salary. The motorcyclist’s time saved is estimated by dividing the time spent on the conventional bus by the time spent on the road by motorcycle. The difference between the time spent on the BRT system and the time spent on the traditional system is the operator’s time savings. Estimated the proportion of motorcyclists agreeing to switch to BRT at 65.9 percent from a survey of 365 residents in Ho Chi Minh City [26]. In [31] survey of the need to transfer to BRT in the Indonesian capital of Jakarta, 20 percent of passengers were willing to switch from motorcycles. Global assessment of people’s willingness to change to BRT systems is conducted [32], reporting that 73 percent of private vehicle riders agreed to it, with the time savings accounting for 46 percent of the total economic value of a BRT project [30]. This figure is also consistent with the results from the willingness to transfer section below.

(3)

Externalities reduction (cost associated with vehicle air pollution and accident reduction): External costs are important and considered in the Highway Development and Management Model (HDM-4) by the [33]. It is estimated that fatal traffic accidents are reduced by 50 percent with a priority system for buses [34]. In Latin America, the cost associated with traffic safety amounts to 16 percent of the entire economic value of the BRT project, while the emission benefit accounts for 3 percent [30]. The cost of externalities is computed by multiplying the external cost of the vehicle by the number of passengers, plus the external costs of the motorcycle by the number of motorcycle riders shifting to BRT.

(4)

Cost savings associated with illness reduction: Cost savings related to disease prevention due to exposure to fine dust PM10. This analysis was adapted from [35] who used a transfer method to quantify the disease costs associated with residents in Can Tho City being exposed to PM10 fine dust. The authors used the cost of illness (COI) method to evaluate the influence of PM10 dust on the diseases acquired in Baguio City, Philippines, using epidemiological data and quantifying the cost of damage caused by air pollution in Baguio City [24]. When the BRT system is implemented, emissions will be reduced and people will be relieved of numerous disease-related costs.

(5)

The BRT’s fare revenues are determined using the formula of the total fare on the entire route multiplied by the expected annual passenger volume. The ticket price is determined per the regulations promulgated by the Can Tho City People’s Committee [22].

2.2.6. Sensitivity Analysis

The majority of projects evaluated using CBA are based on projections of future usage, which can be uncertain. Sensitivity analysis is used to quantify the various factors that substantially affect the future projection assumptions and the calculated net benefits. This risk analysis technique analyzes the change in NPV (or IRR) over time due to changing one input variable while keeping the other variables constant [36]. The first step is to identify the factors that significantly affect the project’s net present value (NPV); the second step is to calculate the impact on the NPV of these variables changing by a certain percentage; and finally, to determine how the NPV varies. The factors to be tested are as follows:

(1)

Traffic flow sensitivity: This is a critical element that directly impacts the benefits. Assuming all other variables stay constant, whether the number of users grows or drops by 20 percent, 30 percent, or 50 percent will affect the project’s benefits. The estimated proportion is based on a decline in passenger traffic on conventional buses. The passenger capacity is decreased by 50 percent, implying that express buses do not attract passengers. In this instance, the passenger capacity is lower than that of traditional buses.

(2)

Fare sensitivity: If BRT fares are expected to be equal to current fares (USD 0.39/trip, according to the ticket prices specified in Local Government Agency Decision No. 1973/QĐ-UBND, the fare applied to 15 km bus routes), this analysis considers what would happen if ticket price dropped to USD 0.26/trip, USD 0.17/trip, or increased to USD 0.52/trip. If the BRT system’s fee is set at the same level as the conventional bus, and the ticket price is less than the existing lowest fare in Can Tho City, the project’s income and net benefits would be affected.

(3)

Sensitivity to investment cost: Investment cost rise by 10 percent, 30 percent, and 50 percent. As the investment cost typically enhances the quality of infrastructure a decrease in costs is not analyzed. The investment cost ranges from 1.4 million USD/km (Jakarta) to 12.5 million USD/km (Bogotá). The cost is approximately USD 1.4 to 3.5 million/km for a BRT system that requires only minor road infrastructure improvements, while the investment ranges from USD 3.8 to 12.5 million/km for a BRT system that requires new pavement for two bus lanes in each direction or purchasing new vehicles.

(4)

Sensitivity to the cost of illness: Savings due to the reduced costs of illness is one of the benefits that people value highly. Assuming all the variables remain constant, the NPV changes if the cost of illness is reduced by 20 percent or 30 percent or if changes in environmental pollution increase by 20 percent or 30 percent due to various factors, including traffic activity.

2.2.7. Approach for Estimating Willingness to Pay to Shift from Private Vehicle to BRT

The two approaches to estimating the willingness to pay (WTP) to derive the economic valuation are the revealed preference and stated preference. Among the stated preference valuation methods, the contingent valuation method (CVM) has been extensively used to ascertain customer utility or preferences for goods or services. This method is based on hypothetical situations and involves respondents expressing their maximum willingness to pay (WTP) for products or services through a questionnaire [37,38]. In several Asian nations, WTP has been used to evaluate transportation-related goods, such as air quality improvements [39,40], traffic congestion reduction [41], and improvement in transportation quality [42,43,44]. WTP research on transportation-related products has been conducted in Vietnam’s two biggest cities—Ha Noi and HCMC, but not in smaller towns such as Da Nang and Can Tho [45,46,47].

There are few CBA and CVM studies on transportation-related goods that have been conducted in Vietnam. The authors [46] used the CVM to estimate the WTP of prospective Metro line customers in HCMC. It was estimated that Consumers were willing to pay an average premium of USD 0.41 for each metro ride, with the most common WTP ranging from USD 0.35 to USD 0.52 per ride. Due to the scarcity of information on this topic provided by previous studies, we fill this gap by estimating the economic value placed by the locals on the BRT project. The study then compares BRT with WTP, which is essential for validating the predicted values used in public policy implementation. The respondents were questioned using a doubled-bounded dichotomous choice CVM method. As a result, over 150 respondents riding a motorcycle were given a dual binary choice question about their readiness to pay to switch from using a motorcycle to an express bus, with five alternative price settings (

Table 1. Willingness to pay for the double-bounded dichotomous choice question.

Bid	Second Bid (Lower) (USD/Person)	Initial Bid (USD/Person)	Second Bid (Upper) (USD/Person)
1	0.35	0.44	0.52
2	0.44	0.52	0.61
3	0.52	0.61	0.70
4	0.61	0.70	0.79
5	0.70	0.79	0.87

).

The researchers first showed the respondents the final BRT implementation and development scenario. Then they provided a cheap-talk script to the respondents to eliminate WTP bias. These prices were randomly assigned during face-to-face interviews with the respondents. To avoid initial deviation, they were also asked whether or not they agreed with a higher price after providing a bid. Otherwise, a lower price was provided if the initial offer was not accepted. A contribution of this research was to test whether or not any hypothetical bias existed in the WTP estimation. As stated in the literature, the inferred valuation approach reveals a WTP value lower than the conventional approach by up to 30 percent [18]. In the conventional approach, the enumerators asked the respondents:

“Would you be willing to pay (Vietnamese Dong—VND) per ticket for a newly established BRT program in your area for a 15 km length from Can Tho airport to Cai Rang Bus Station?”

Then, in the inferred valuation section, two indirect questions followed conventional questions by asking respondents to predict whether or not their neighbors’ perception would be favorable towards this project, which we coded as inferred valuation 1 (IV 1) and 2 (IV2), respectively.

“Do you think other people would be willing to pay… (VND) for this project?” And

“Do you think other people think you would be willing to pay…(VND) for this project?” [18]. Based on economic theory and previous research, the determinants of willingness to pay for BRT are presented in

Table 2. The determinants of people’s willingness to pay for BRT.

Variable Name	Description	Expected Sign
Gender	Dummy variable (male: 1, female: 0)	+/−
Age	Continuous variable, respondents’ age	+
Location	Dummy variable (inner city: 1, other: 0)	+
Occupation 1	Dummy variable (workers: 1, other occupation: 0)	+
Occupation 2	Dummy variable (student: 1, other: 0)	+
Education level	1 to 12 are grades 1 to 12, vocational education: 13, college: 14, university: 15, and master: 16	−
Income	Continuous variable, respondents’ monthly income	−
Traffic jams	Dummy variable (traffic jams: 1, otherwise: 0)	+
Motorbikes	Number of motorbikes owned by households	−

.

3. Results and Discussion

3.1. Results of Cost and Benefit Analysis of BRT Project in Can Tho City

In this section, a detailed analysis of the cost and benefit estimation is presented. Based on the literature review and information provided above, the BRT costs have been categorized into three types including investment, operation, and maintenance costs. The benefits of the BRT project have also been categorized into three categories including reduced motorbike operating costs, reduced travel time costs, and minimized external costs. Other benefits such as the BRT system’s fare revenues are presented in Table entitled “Results for net present benefit (NPV) of the Can Tho Airport–Cai Rang BRT project (USD)” below.

3.1.1. Cost Estimates of BRT Project:

Investment cost: Based on the preliminary description and the infrastructure status of the Hanoi BRT project by the World Bank [48], the Can Tho Airport Express bus to Cai Rang bus station would use existing routes and available lanes, and would need no additional construction or expansion of lanes. Therefore, some costs would be saved, such as road construction, resettlement, and clearance compensation.

Table 3. The investment cost for the BRT system of Can Tho Airport–Cai Rang Bus Station.

Type	The Investment Cost for Can Tho Airport–Cai Rang Bus Station Project Is USD 3 Million
The total length of the road (km)	15
Construction cost (USD million)	38.192
Vehicle cost (USD million)	4.219

Construction cost = USD 2,4 million/km × (1 + 3 percent)² × 15 km = USD 38.192; Vehicle cost for 18 vehicles = USD 214,504 × (1 + 3 percent)³ × 18 vehicles = USD 4.219; and 3 percent is the inflation rate.

shows the investment cost of the BRT project from Can Tho Airport to Cai Rang Bus Station.

Operation Cost: These costs include labor (

Table 4. Labor wages for the entire BRT system between Can Tho Airport and Cai Rang Bus Station.

Type of labor	Number of Employees for the Whole System	Salary per Employee (USD)	The Salary of the Whole System (USD)
Driver	41	5871.21	240,718.96
Selling tickets	42	4275.14	179,555.96
Maintenance	4	5871.21	23,484.80
Manager	6	6498.21	38,989.30
Other labor cost	7	2907.08	20,349.67
Total			503,098.69

Number of employees in the whole system = number of employees per vehicle × 18 vehicles. System salary = number of employees for the whole system × salary per employee. The estimated cost value up to 2022 is 503,098.69 × (1+ 3 percent)² = USD 533,737.4.

) and fuel costs (

Table 5. Fuel cost of BRT system from the Can Tho Airport–Cai Rang Bus Station per day.

Time Hours	Time Hours (Hour)	Number of Vehicles	Fuel Cost 1 Vehicle/Hour (USD)	Total Fuel Cost per Day (USD)
Peak	4.5	13	4.6574	272.4579
Off-peak hours	10.5	18	4.6574	880.2486
Total				1152.7065

USD 0.73/L × 0.29 L/km × 22 km/h = USD 4.6574. (Based on Circular 65/2014/TT-BGTVT for buses with a capacity of more than 60 passengers and fuel cost on 26 June 2021).

) (based on the scheme to develop mechanisms and policies to encourage the development of public transport by bus in Can Tho City (2016–2020 period and orientation after 2020) by the Ministry of Transport [7].

According to the results in Table 5, the daily fuel cost of the BRT system would be USD 1152. The BRT system of the Can Tho Airport–Cai Rang Bus Station operates for 360 days a year. The fuel cost in 2021 was VND 25,612,191 × 360 days = USD 414,974. Fuel costs are estimated for 2022 with an inflation rate of 3 percent/year of 9,220,388,760 × (1 + 0.03) × 2 = USD 906,907.

Maintenance Cost: The maintenance cost of the BRT system (

Table 6. Maintenance and repair costs of the BRT system.

Facility maintenance costs	USD 3376.988/km/year
Infrastructure	3376.998 × 15 km = USD 50,654.818
Facility maintenance costs	USD 0.218/km
Whole line/year infrastructure	0.218 × 1,722,600 km = USD 375,654.958

1,722,600 km = 22 km/h × 360 days × (18 vehicles × 4.5 peak hours + 13 vehicles × 10.5 off-peak hours) facility maintenance costs (including lubricant and tire changes).

) includes infrastructure maintenance costs (road maintenance, station maintenance, information system maintenance, signal light system maintenance, and semi system maintenance) and other maintenance costs (vehicle, oil, and tire maintenance). Using a 3 percent inflation rate, the cost of infrastructure fiber maintenance and repair in 2022 would be USD 50,654.8181 × (1 + 0.03)² = USD 53,739.696. Other maintenance costs in 2022 include USD 375,654.958 × (1 + 0.03)² = USD 398,532.345/year.

3.1.2. Benefit Estimates of BRT Project in Can Tho City

Benefit from reduced motorbike operating costs: In 2021, the number of potential passengers for the Can Tho Airport–Cais Rang Bus Station line was 435,587 motorcycles in three districts × 65.9 percent = 287,049 passengers. Based on the current traffic growth in Can Tho City, it is estimated that the total traffic growth rate for the entire route from 2020 to 2031 will be 4.5 percent, equivalent to the average growth of passengers carried from 2010 to 2018. Minimizing motorcycle operating in 2018 = motorcycle external costs (USD 0.39) × the number of motorcycles transferred to the BRT system (287,049 passengers) = USD 111,433.7.

Thus, in 2022, the operating cost saved on motorcycles would be USD 111,433.7 × (1 + 0.045)³ × (1 + 0.03)³ = USD 138,955.93. Similarly, we calculated the operating cost reduction benefit of motorcycles between 2023 and 2030.

Benefit from reduced travel time costs: Assuming the same number of passengers on each route, there will be an average of 1.32 million passengers per route in 2022. Given Can Tho City’s passenger growth rate of 4.5 percent from 202- to 2030, the number of passengers taking the bus in 2022 will be 1.32 × (1 + 0.045) = 1.51 million. As a result of the transition from motorcycle to BRT, the number of passengers increased to 287,049 in 2018. With a 4.5 percent/year growth rate, the number of passengers is projected to reach 287,049 × (1 + 0.045)³ = 327,571 in 2022.

Estimation of saving time values on the Can Tho Airport–Cai Rang Bus Station route in 2022 is shown in

Table 7. Estimation of saving time values on the Can Tho Airport–Cai Rang Bus Station route in 2022.

Vehicle Type	Time Cost (USD/min)	Saving Time (min)	Number of Passengers	Time-Saving Value (USD)
Motorcycle	0.0126	12	327,571	49,528.735
Bus	0.0126	14	1,510,000	266,364
Total				315,892.735

.

Benefit from minimizing external costs: Following the BRT implementation in Bogotas, fatal traffic accidents decreased by 88 percent along the TransMilenio route [49,50,51]. In Istanbul, removing minibuses and regular bus routes and deploying new buses in a dedicated lane resulted in a 64 percent reduction in bus accidents over a one-year period [52].

Cost of passenger accident on Can Tho Airport - Cai Rang bus station in 2022 is shown in

Table 8. Cost of passenger accident on Can Tho Airport-Cai Rang bus station in 2022.

Type of Vehicle Used	Traffic Accident Reduction Cost (USD/Passenger/Trip)	Number of Passengers Transferring to BRT (Person)	Total Cost of Minimizing Accidents on the Whole Route (USD)
Motorcycle	0.0140	327,571	4585.994
Bus	0.0047	1,510,000	7097
Total			11,682.994

.

3.1.3. Net Present Value Analysis

The benefit-to-cost ratio (B/C) using the above formula indicates that the total discounted benefits of the project, including time savings, operating cost savings, and external cost savings associated with PM10 dust exposure from 2022 to 2031, are USD 67,542,770; the total discounted project cost, including investment cost, operation cost, maintenance, and repair cost, is USD 53,877,326 (see

Table 9. Results for net present benefit (NPV) of the Can Tho Airport–Cai Rang BRT project (USD).

Year	Investment Cost	Operating Cost	Maintenance Cost	Savings on Motorbike Operating Costs	Time-Saving	Savings on Externality Costs	Savings on Disease Costs Due to Fine Dust Exposure PM10	Revenue	NPV
2020	(37,866,972)	-	-	-	-	-	-	-	(37,866,972)
2021	(3,950,459)	-	-	-	-	-	-	-	(3,950,459)
2022	-	−842,595	−395,806	121,844	277,501	10.22	6,595,675	671,997	6,438,882
2023	-	−812,626	−381,739	122,805	279,685	10.31	6,360,987	677,239	6,256,706
2024	-	−783,705	−368,152	123,766	281,870	10.40	6,134,688	682,569	6,081,389
2025	-	−755,789	−355,046	124,727	284,054	10.44	5,916,426	687,899	5,912,669
2026	-	−728,921	−342,420	125,688	286,282	10.53	5,705,898	693,272	5,750,371
2027	-	−702,971	−330,232	126,693	288,510	10.62	5,502,883	698,689	5,594,190
2028	-	−677,982	−318,480	127,654	290,782	10.70	5,307,077	704,150	5,443,949
2029	-	−653,866	−307,165	128,659	293,054	10.79	5,118,261	709,655	5,299,432
2030	-	−630,581	−296,199	129,664	295,369	10.88	4,936,129	715,203	5,160,419
2031	-	−608,126	−285,671	130,668	297,641	10.97	4,760,507	720,795	5,026,780
								NPV	15,147,357

). The project’s benefit-to-cost ratio is B/C = 67,542,770/53,877,326 = 1.222 > 1. This means that the project earns 1.222 units of interest for every unit spent. Moreover, as this is a public project, this ratio increases as additional social benefits are included. The NPV analysis indicates the BRT project’s benefits exceed the costs and negative impacts. The cost-benefit analysis of BRT over a ten-year period resulted in more than USD 15 million in income. However, the CBA analysis is susceptible to variation depending on the assumptions and projection uncertainties. The next section provides a sensitivity analysis and WTP estimates for the BRT to verify and provide accurate project feasibility estimations.

3.1.4. Sensitivity Analysis

A sensitivity analysis (

Table 10. Sensitivity analysis of using BRT.

Change in number of passengers (%)	−50	−30	−20	0	20
NPV (USD)	10,176,322	12,164,701	13,158,934	15,147,357	17,135,780
Change in fares (USD)		0.393	0.262	0.175	0.524
NPV (USD)		15,147,357	12,826,868	11,279,860	17,467,846
Percentage change in investment costs (%)		0	10	30	50
Investment cost (USD)		37,867,191	41,653,692	49,227,086	56,800,481
NPV (USD)		15,147,357	11,360,638	3,787,243	−3,786,151
Change in the cost of illness (%)	−30	−10	0	10	30
NPV (USD)	−1,754,216	9,513,499	15,147,357	25,037,920	37,071,822

) was used to determine the impact of changes in critical variables on the net benefits of the project. The variables tested were: (1) the change in the number of express bus passengers, (2) a change in fares, (3) a change in infrastructure investment expenditure, and (4) a change in the costs of illness caused by exposure to fine dust PM10.

The results of the sensitivity analysis show that the project-specific factors have a range of impacts. The quantity of passengers shows a minor sensitivity to the NPV of the project, a 50 percent reduction in passengers decreased the NPV by just over 30%. However, there is some sensitivity to fare adjustments affecting the overall NPV. The initial investment cost can rise by up to 30 percent with the NPV remaining positive, but it turns negative with a 50 percent increase.

The project’s sensitivity to changes in illness costs is considerable. A 10 percent rise in illness costs also results in the project NPV increasing by over 65 percent. Reducing the cost of illness provides a strong rationale for the BRT project. According to health authorities in Vietnam, the incidence of individuals suffering from a pollution-related illness has been steadily increasing in recent years, particularly in lung cancer-related diseases. In addition, the Department of Environment (Ministry of Natural Resources and Environment) reports that motorcycles have increased the concentration of suspended dust, PM10, and PM2.5 in the air by 1.4 to 2.2 times in recent years. This content exceeds the allowed limit by a factor of 25 to 50 percent. This CBA study demonstrates that implementing BRT in small cities in developing nations provides large benefits in reducing these costs.

3.2. Willingness to Pay and Its Determinants

3.2.1. Respondents’ Perceptions of Private and Public Transportation Systems

Respondents were first questioned about their environmental concerns. They were asked to rank their degree of concern for each environmental issue on a 1-to-5-point Likert scale, with 1 representing less concern and 5 indicating strong concern. The results suggest that air pollution and food contamination are the most important issues for respondents, scoring 4.76/5 and 4.43/5, respectively. There was also concern about the extent of traffic congestion and anxiety about noise pollution.

The respondents were asked about the degree of agreement with efficacy measures through individual and public responses (

Table 11. Respondents’ level of concern about environmental issues.

Categories	Mean	Std. Dev.	Min	Max
Trash	2.81	1.53	1	5
Air pollution	4.76	1.37	1	5
Noise	1.87	1.17	1	5
Pollution water	4.05	1.26	1	5
Food contamination	4.43	1.37	1	5
Traffic jam	3.08	1.57	1	5

). Interestingly, the most often cited solutions were connected with the government’s present bus upgrade or replacement plans, including subsidies for the elderly and students, subsidies for the BRT investment, improvements to bus stop stations, and a priority lane for BRT. It is worth noting, however, that certain indicators of individual restrictions are low, suggesting that people are still interested in the efficacy of public transit. Briefly, respondents seem to be highly aware of traffic congestion and air pollution and, in terms of solutions, that high-quality public transit addresses this problem.

3.2.2. WTP for the Private Vehicle to Change Mode Choice to BRT

The survey results of respondents’ characteristics revealed that out of 150 respondents, 77 respondents were male (accounting for 51.33 percent) and 73 respondents were female (accounting for 48.67 percent). This survey ratio ensured that there was no gender disparity in the analysis. In addition, the average age of the 150 respondents was nearly 30 years old (29.9 years old), while the lowest and highest age of respondents was 16 and 60 years old, respectively. This age distribution indicated that the sample for this study represented the population in Can Tho City because most of them are of working age. Based on the formula, the number of observations in this research is therefore large enough to represent the population.

The survey results indicated that most respondents agreed to shift to BRT as their primary transportation for commuting. This is consistent with previous research which indicated that the percentage of people agreeing to shift to public transport was 20 percent, 65.9 percent, and 73 percent in Indonesia and other countries, respectively [26,31,32]. The results of a double-bounded dichotomous choice questionnaire (DB-DC) used to elicit the WTP value indicated that the majority of respondents answered “yes” to the first price, except for the USD 0.787 price. To be precise, 33 respondents (22 percent) disagreed (nn) with both the first and second prices, whereas 69 respondents (46 percent) answered yes (yy) to both. A total of 17 respondents (11.33 percent) said that they disagreed with the first price but agreed with the second (ny), whereas 31 respondents (20.67 percent) indicated that they agreed with the first price but disagreed with the second (ny). In addition, the results suggested that when the price rises, the proportion of respondents who disagree increases, which fits with the economic theory on the relationship between price and quantity demanded.

3.2.3. Determinants of WTP Disparity for Transformation Mode Choice

To estimate the WTP values and the determinants of WTP on the shift from motorbike to BRT in Can Tho City by the parametric method, this research employed the doubleb STATA command and then applied the DB-DC method.

The estimated results (

Table 12. Estimation results of willingness to pay for the shifting from motorcycles to BRTs.

Variables	Coef.	Std. Err.	p-Value
Age	−115.8561 **	58.0316	0.046
Gender	2082.163 *	1072.056	0.052
Location	2449.866 *	1293.252	0.058
Occupation 1	365.4887 ns	1284.069	0.776
Occupation 2	844.5021 ns	1620.462	0.602
Education level	−747.6311 **	345.4736	0.030
Income	0.0003973 ns	0.0002688	0.139
Traffic jams	2422.909 **	1207.418	0.045
Motorbikes	−1460.885 ns	1256.552	0.245
Wald chi2 (9)	16.53
Number of observations	150
Prob > chi2 Log-likelihood	0.0056 −177.8424

Note: *, ** statistically significant at 10 percent and 5 percent, respectively; ns: not statistically significant.

) indicated that five independent variables were statistically significant, including age, education level, degree of traffic congestion, gender, and location. The remaining three independent variables were not statistically significant: occupation 1, occupation 2, income, and the number of motorcycles owned by respondents’ households, indicating that there is no difference in respondents’ willingness to pay to switch from motorcycle to BRT based on gender or the number of private vehicles owned. Age and WTP have a negative correlation, indicating that young people prefer private vehicles over BRT. This highlights the fact that in developing countries where parking spaces and mobility are few, convenience is necessary for BRT development. In other words, increasing the pressure on service quality may be required. In addition, since men are the main workforce in MRD, the results have significant implications for BRT adoption in terms of motives and demographic characteristics.

Furthermore, respondents who live near the city center and BRT lines had a greater need for the transfer than those in suburban areas. Finally, the traffic jam variable indicated that as traffic congestion increases, the demand for BRT increases, resulting in a greater willingness to pay. This provides a critical foundation for making policy suggestions to encourage the transition from motorcycle to BRT. Contrary to our assumptions, the results of the study showed that education level has a negative influence on WTP values. Perhaps, people with higher educational attainment are still hesitant to utilize BRT as their primary mode of transportation to their destination due to the inconvenience and harmful effects of current public transportation. However, pilot BRT deployment may enhance Asia’s favorable impression of BRT transportation’s modernity and convenience.

3.2.4. Differences among Approaches

The WTP to shift to a BRT system was estimated from different approaches, the conventional CVM and the inferred valuation (IV) methods 1 and 2. According to the DB-DC estimate results, the willingness to pay value was USD 0.6840, with a confidence interval of USD 0.6421 to USD 0.725 (see

Table 13. Estimation results of mean WTP.

Approach	Mean WTP (USD)	Std. Err.	p-Value	95% Conf. Interval
				Lower Bound	Upper Bound
Conventional CVM	0.6840	0.0214	0.000	0.6421	0.7259
Inferred valuation 1	0.6506	0.0202	0.000	0.6110	0.6901
Inferred valuation 2	0.5061	0.0305	0.000	0.4463	0.5660

). The inferred valuation of method 1 and 2 resulted in lower WTP results of 0.65 and 0.51, respectively. These results are consistent with [53] who found that inferred valuations are lower than conventional CVM. However, this method is anticipated to be more suitable for predicting actual WTP values and may verify the conventional approach. As a result, the WTP obtained from this research’s IV approach may be used as a lower limit for determining the BRT ticket price. This result is consistent with previous research examining families’ WTP for climate risk reduction programs [18].

The WTP estimates can be compared to the pricing used in the CBA. The fares used in that analysis are much lower, indicating the potential to meet the project costs with higher fares if necessary. These results indicate that policymakers could consider including CBA when evaluating instrumental projects and WTP for comparison. However, it is also critical for motorcycle users to understand the convenience and benefits of BRT over private vehicles in terms of long-term costs, environmental benefits, and reduction in traffic congestion.

4. Conclusions and Policy Implications

The fast economic growth and urbanization in Vietnam have heightened concerns about the environment and the issues associated with increasing traffic congestion and pollution. The analysis of the BRT in Can Tho City, Vietnam, indicates the economic viability of BRT systems contributing to alleviating some of these issues. Given the rise in air pollution caused by private vehicle expansion and urbanization, this study assessed the BRT system’s cost-to-benefit analysis and motorbike riders’ willingness to pay for the advantages of BRT. The CBA and WTP results have several implications for governments seeking to implement public transportation investments. The study also revealed apparent benefits, including reduced air pollution, transportation decongestion, and time savings. This study concludes that BRT should be seen as a cost-effective investment strategy, a result that is consistent with other BRT investment success stories in Asia, including Thailand, Indonesia, and China [54]. In addition, this research may be used as a case study to demonstrate the benefits of BRT investment in developing countries; BRT expansion is a necessity for urban growth and to alleviate traffic congestion. Notably, the World Bank’s first BRT project in Asia, the Hanoi bus rapid transit system, was deemed unsuccessful due to insufficient passenger demand [48]. However, this research supports that a large percentage of motorists are ready to switch to BRT rather than using a private vehicle. This is also a significant contribution of this study; while earlier studies estimated the traffic demand based on a forecast, this research is based on the motorists’ opinions. The results of willingness to pay also provide insight into the possible consequences of switching from a motorcycle to BRT system. When examining the factors of WTP levels, it is clear that perceptions of traffic congestion, gender, and age significantly affect WTP levels for a BRT transition. As a result, policymakers need to consider these features while formulating initiatives. Furthermore, it is critical to note that, due to local governments’ time and budgetary constraints, the WTP estimations derived from this study may be utilized to convince the private sector to participate in a BRT project. Although the BRT system’s benefits and costs and the objective information show the positive effects of BRT, we suggest that policymakers carefully evaluate a trial of BRT implementation in developing countries by considering institutional factors such as local experience with BRT, political support, and the effectiveness of local government project investment. Lastly, based on the WTP value elicited from the observation survey, this research suggests that if the government implementation of BRT appears to be impractical, private partners might work on its creation.