Valuing external benefits of underground rail transit in monetary terms: A practical method applied to Changzhou City

Underground rail transit is undergoing intense development across China. However, when it comes to cost-benefit analysis in the decision-making process, the benefit aspects, especially the external ones, of underground rail transit are still ambiguous when compared with the cost aspects. For one thing, the external benefits derived from underground rail transit is complicate to capture; for another, extensive research has not been represented in comparable monetary terms, which to some extent is impeding the urban development of some Chinese cities. This paper employed the service replacement cost method (SRCM) framework, after shedding particular light on the theoretical interpretation of SRCM from the perspective of marginal value theory for non-market goods and modifying it into three major steps, to translate the external benefits of underground rail transit into monetary terms. The method was then applied to Changzhou City, China as an illustrative case study. Results have shown that the development of underground rail transit could contribute an important portion for urban economy even though there remain gaps to fill in the method.