[sustran] Re: WB urban transport draft strategy ex.summ.1

Eric Bruun ebruun at rci.rutgers.edu
Thu Nov 23 09:33:30 JST 2000



I do not disagree with the principle that lower income communities should
not subsidize higher income communities. But again this is not what the 
ideologues meant, if I recall the British government and World Bank white
papers from the early 1980s. They thought a transfer-based network was 
bad because this "forced" people to transfer. They claimed that market
forces would give better service. 

The systems with the highest annual ridership are integrated in route
structure and fares. While the system as a whole requires subsidy,
it varies from route to route. But my point is that you can not dissect
a system this way. For example, Montreal's Metro has a higher operating
cost recovery than buses on average, but if you cut out bus service, 
ridership on the Metro goes down too (and the social costs from increased
driving go up). This is where the conservative ideology comes in --- 
their concern is with the network subsidy, while they don't acknowledge
the avoided social and private costs of auto use.

The unfairness of some communities that are wealthy getting relatively
higher subsidized service is usually outweighed by the higher quality
of service and reduced driving that even the low income communities get.
If you want to see how the working class gets treated in an
uncross-subsidized market, try taking Greyhound in the US sometime.

Eric

On Sat, 11 Nov 2000, SUSTRAN Resource Centre wrote:

> At 18:03 9/11/00 +0300, Alan Howes wrote:
> >Broadly I agree with what the WB are saying - and I am neither conservative
> >nor an economist. Of course there is scope for some cross-subsidy within
> >transit networks - but you have to be clear where and why. Who is
> >subsidising whom in Toronto and Montreal? (And do any routes actually make a
> >_profit_ that's available for cross-subsidy?) If it's low-income users on
> >high-volume lines subsidising high-income users on low-volume lines, then I
> >would venture to suggest that something is wrong - and this is what I read
> >the WB as saying. If anyone should bear the cross-subsidy, it should be the
> >car users in the high-income areas - especially commuters. But cross-subsidy
> >is a very blunt instrument compared with a proper road user charging system
> >that, as nearly as possible, reflects the true infrastructure, operational
> >and social costs of transport use.
> 
> In fact, they ARE apparently advocating transfers between road and public
> transport sectors, eg by talking about integrated finance for all modes of
> urban transport. It will be interesting to see how strongly they are
> committed to this. I am sure there may be some problems in the details -
> which I have not yet examined carefully ... but personally I  support the
> idea of integrated finance via an urban transport fund or such like.  
> 
> The following quotes are the most relevant ones from the exec summary of
> the review document:
> 
> "xxxvii. Pricing principles for public transport modes should be determined
> within an integrated urban strategy, and should then reflect the extent to
> which road infrastructure is adequately charged. Given the high level of
> interaction between modes, and the prevalent undercharging of road use, no
> absolute value should be ascribed to covering all costs from fares, either
> for public transport as a whole, or for individual modes. In particular,
> transfers between roads and public transport services, and between modes of
> public transport are potentially consistent with optimal pricing strategy.
> However, in the interests of efficient service supply, transport operators
> should operate competitively, with purely commercial objectives, financial
> transfers being achieved through contracts between municipal authorities
> and operators for the supply of services. Any non-commercial objectives
> imposed on operators should be compensated directly and transparently,
> where appropriate by non-transport line agencies in whose interests they
> are imposed. Above all, In the absence of appropriate contracting or other
> support mechanisms the sustainability of public transport service should be
> paramount, and generally have precedence over traditional price regulation
> arrangements.
> 
> xxxviii. Some urban transport financing principles follow. Given the
> interaction between modes, there is a strong case for the pooling of urban
> transport financial resources within an urban transport fund administered
> by a strategic transport authority at the municipal or metropolitan level.
> Inter-governmental transfers should normally be made to the fund, and
> should be structured to avoid distorting the efficient allocation of
> resources within the transport sector at the local level. Private sector
> financing for transport infrastructure should be raised through competitive
> tendering of concessions, which may be supported by public contributions,
> so long as these have been subject to proper cost benefit analysis."
> 
> Paul
> 
> 
> Paul BARTER
> (a.k.a.  A. Rahman Paul Barter)
> SUSTRAN Resource Centre
> P.O. Box 11501,  50748 Kuala Lumpur, Malaysia
> sustran at po.jaring.my
> 
> Information services for the Sustainable Transport Action Network
> for Asia and the Pacific (the SUSTRAN Network)
> http://www.malaysiakini.com/sustran
> http://www.geocities.com/sustrannet
> 



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