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rinancial savings Page 3 of 4 The main financial costs of crime can be divided into tangible costs (eg the cost of stolen or damaged property, medical, police, social and victim services costs, lost productivity) and intangible costs (eg the cost of pain or suffering). Recently the Home Office has published detailed estimates of the costs of different kinds of crimes in England and Wales, including tangible and intangible costs, at 1999 prices. This enabled the researchers to provide estimates of the financial costs of each crime recorded as follows: Burglary: Vandalism/outside theft: Cycle theft: Robbery/snatch theft: Assault Threats/pestered: %:1,907 %:329 %:292 %:1,266 %:3,162 %:121 Cost-benefit analysis in Dudley The capital cost of the improved street lighting on the experimentai estate was %:55,000. The annual maintenance and electrical energy costs were less with the new lights than with the old ones (%:2,611 as opposed to %:2,796), because the new lights were significantly more efficient and economical. Hence the annual costs were %:185 less after the improvement. As the improved street lighting was expected to last at least 20 years, it would be reasonable to payoff the capital cost over a 20 year period. Assuming an annual interest rate of 6%, annual payments at the end of each year of %:4,796 would clear the debt in 20 years. Therefore it would be reasonable to translate the cost of improved street lighting into an annual cost of %:4,611. The total savings in the experimental area in one year from 641 prevented crimes came to %:517,067. Thus the financial savings from crimes prevented more than paid for the full capital cost of the improved street lighting within one year. Taking account of the annual savings, the benefitcost ratio was 9.4:1 after one year (%:517,067 / %:54,815). More reasonably, paying off the capital cost over 20 years, the benefit cost ratio was a staggering 112: 1 after one year (%:517,067 / %:4,611). Cost benefit analysis in Stoke-an-Trent The capital cost of the improved lighting scheme on the Stoke-an-Trent experimental estate was U7,071. Because of the fivefold increase in useful light, the annual cost of electrical energy increased from %:935 to %:1,880, and the annual maintenance costs increased from %:286 to %:443. Hence the annual costs were %:1,102 greater after the improvement. Again as the improved lighting was expected to last at least 20 years, it would be reasonable to payoff the capital cost over a 20-year period. With interest, this translated into an annual cost of U,822. The total savings in the experimental area in one year from 266 prevented crimes came to %:175,596. Thus, the financial savings from crimes prevented paid for the full cost of the improved street lighting scheme plus the increased annual costs within one year. Including the full capital cost, the benefit:cost ratio was 2.2:1 after one year. More reasonably, paying off the capital cost over 20 years, the benefitcost ratio was 22:1 after one year (%:175,596 / U,822). Conclusions It is clear from these calculations that improved street lighting can be extremely cost- effective to the extent that it leads to reductions in crime. Assuming that the reductions were permanent, the savings exceeded the costs by between 22 and 112 times in one year, depending on different assumptions. Even assuming that the reductions in crime wore off after one year, the savings exceeded the costs by between 2.2 and 9.4 times http://www.urbislighting.com/switchon2_2.php3 7/30/2002