[sustran] Re: WB Urban Transport Strategy Comments

[Todd Litman]

At 04:42 PM 11/8/00 -0500, you wrote:
>To whet your appetites to get involved here is the contents page and
>executive summary of the draft World Bank Urb Transp Strategy review paper.
>http://wbln0018.worldbank.org/transport/utsr.nsf/All+Discussion+Items?OpenV
iew

Our institute has a strong interest in the study of optimal transportation
pricing, and its role as a transportation demand management strategy. Here
are my comments on  "Urban Transport Pricing and Finance," chapter IX of
the World Bank's "Cities on the Move; A World Bank Urban Transport Strategy
Review".

We endorse the conclusions and recommendations regarding pricing and
financing in the Executive Summary. They should apply in developed as well
as developing countries.

Chapter IX defines underpricing primarily in terms of vehicle-to-vehicle
traffic congestion. It is important to recognize that other costs of motor
vehicle use may be of comparable magnitude, including parking costs, crash
damages, delays that motor vehicle traffic imposes on non-motorized modes,
pollution, and the economic costs that fuel and vehicle imports can cause
to an economy (compared with consumer expenditures on domestically-produced
goods). This suggests, for example, that pricing reforms that affect all
automobile travel may be justified, not just under urban-peak conditions.
This is not to suggest that congestion costs should be ignored, but I would
suggest that the chapter begin with discussion of underpricing in general,
not just as it applies to urban roadway congestion.

The chapter implies that fuel taxes are the main way to charge motorists
for vehicle use. I suggest adding discussion of mileage-based charges, as
discussed in our paper "Distance-Based Charges; A Practical Strategy for
More Optimal Vehicle Pricing", (presented at the Transportation Research
Board 78th Annual Meeting (1999) and posted at http://www.vtpi.org). This
shows how various types of weight-distance fees can be used to more
accurately charge for roadway use, insurance/crash risk and pollution
emissions, and avoids many of the problems associated with both fuel taxes
and road tolls. This instrument would allow existing fixed charges
(insurance and vehicle registration fees) to be prorated by mileage, giving
motorists a new incentive to reduce their mileage. Section 9.22(d) suggests
support for distance-based insurance and emission fees, but offers no
details or references.

I believe that the discussion of parking pricing should expand to mention
various parking management strategies that indirectly affect parking
prices. Current practices in developed countries, often copied in
developing countries, favor generous amounts of off-street parking in new
developments. This tends to drive parking prices down below the natural
market, creating a self-fulfilling prophecy of increased automobile use and
increased parking demand. Parking management strategies can encourage more
efficient use of existing parking supply (see the chapter on "Parking
Management" in the Online TDM Encyclopedia at http://www.vtpi.org).

The report suggests that all road charges and fuel tax surcharge revenue
should be dedicated to regional/local transportation budgets, rather than
to the central government treasury. There are several justifications for
having a base fuel tax that funds general government expenses, particularly
in countries that import fuel, and therefore bear a national economic
burden from fuel imports. A number of studies suggest that shifting general
taxes from income to the consumption of resources such as fuel can have
economic development benefits (see Douglas Norland and Kim Ninassi, "Price
It Right; Energy Pricing and Fundamental Tax Reform," Alliance to Save
Energy, Washington DC; www.ase.org, 1998; Dr. Rainer Walz, Dr. Joachim
Schleich, Regina Betz and Carsten Nathani, "A Review of Employment Effects
of European Union Policies and Measures for CO2 Emission Reductions,"
Fraunhofer Institute, www.isst.fhg.de, May 1999.) Fuel taxes can also be
considered a surrogate for pollution costs, medical costs, and consumption
of a nation's natural resources. For these reasons, I suggest that the
report specify that regional/local governments have the ability to impose
additional fuel/road taxes, beyond the basic level established at the
national level, to fund transportation improvements, but that the report
not imply that fuel should be exempt from all general taxes.


Sincerely,

Todd Litman, Director
Victoria Transport Policy Institute
"Efficiency - Equity - Clarity"
1250 Rudlin Street
Victoria, BC, V8V 3R7, Canada
Phone & Fax: 250-360-1560
E-mail:  litman at vtpi.org
Website: http://www.vtpi.org