[sustran] Re: Sustran-discuss Digest, Vol 74, Issue 10

[Joachim Bergerhoff]

(sorry for the post that went out unfinished)

Dear Hassaan,

we are all discussing from our own "home" perspective, exposing more the
differences between these situations than fundamental differences in
approach. I hope this is useful for you and look forward to reading your
reactions.

Eric, I am not suggesting to wait until conditions are right, but to make
them right asap. Let me give the practical example of the developing country
I am working in. It has a car ownership of around 10% and a regional bus
system with fairly good service, running between the principal cities every
15 minutes. The system is regulated by the state who sells concessions by
the slot. It is operated by a host of private companies. Most of them don't
have more than 5 vehicles and they all just break even. There also is an
informal market outside the regulated hours and lines or even in competition
with them. The situation is unstable as falling ridership threatens to make
break even impossible. What should be done ?  One consultant proposed to
reduce the scheduled service as to adapt it to shrinking demand, crack down
on informal (illegal) competition, and pay a subsidy to the operators so
they can bus new vehicles.  At the same time, the country's principal
investments go into enlarging roads to 2x2 or more.  Well, with this policy,
ever fewer clients will ride in ever nicer looking buses, while the whole
system goes down the drain of car dependency and huge private and public
deficits for car and petrol imports.  The buses are losing passengers
because they do not provide competitive service in three respects: access,
speed and flexibility.  The informal sector is a good complement in regard
to flexibility and it keeps the fares in check.  Speed is a shared
responsibility of operators and authorities.  More modern buses could
operate faster, but increasingly, congestion is the handicapping factor.
 Access to the bus services (mainly appropriate location of stops and
convenient walking to the stops and waiting conditions) is entirely the
authority's responsibility.  If buses could operate at higher speeds thanks
to appropriate infrastructure and better serve the market thanks to better
access, the system would not only remain self-financed, but could develop.

Todd, I am not advocating that the public should not spend money on public
transportation.  On the contrary, it should spend a lot on public transport
and on non-motorised transport.  But not in subsidies that compensate high
production costs due to automobile congestion and that attract passengers
with artificially low fares.  All around the globe people (are willing to)
spend a lot on transportation.  Public transport is the more efficient mass
transport.  Operations that cannot break even suffer (infra-)structural
handicaps and the need for subsidy is a symptom of bad infrastructure and
regulation policy.  Public policies should not cure the symptoms, but fix
the cause.  Therefore, public money should foremost go into investments that
allow public transport to compete in the transport market, i.e. operate with
profit.    Anybody who has the privilege to think of a new public transport
system should try to build this success into the system, not start with
raising the subsidy for failure.

Yours,

Joachim





Today's Topics:

  1. Re: Public transport subsidies (Todd Alexander Litman)


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Message: 1
Date: Tue, 13 Oct 2009 14:43:25 -0700
From: Todd Alexander Litman <litman at vtpi.org>
Subject: [sustran] Re: Public transport subsidies
To: sustran-discuss at list.jca.apc.org
Message-ID: <20091013214335.3A8982D75B at mx-list.jca.ne.jp>
Content-Type: text/plain; charset="us-ascii"; format=flowed


I agree with Eric. There are several specific justifications for
subsidizing public transportation that do not apply to automobile travel:

* Public transit provides affordable transportation and basic
mobility for non-drivers. This justifies subsidies on equity grounds.
In the U.S., about half of all transit service is justified purely on
this basis (transit service at times and places with low demand, and
special features such as wheelchair lifts). Although this type of
transit may seem costly, it is far cheaper than the alternative:
physically and economically disadvantaged people who lack access, and
motorists forced to chauffeur non-drivers.
* Public transportation enjoys economies of scale and scope (as the
system expands and ridership increases unit costs decline). This
creates a technical justification for subsidies, in order to capture
these efficiencies.
* Public transit subsidies are a second-best response to underpricing
of automobile travel. An efficient transportation market would
require much higher user charges for automobile travel, including
road pricing, parking pricing, distance-based insurance and
registration fees, and higher fuel taxes. My research indicates that
if these are implemented, North American motorists would choose to
drive 25-50% less and rely much more than they do now on alternative
modes (walking, cycling and public transit). Until all of these
reform are implemented, significant subsidies are justified for
alternative modes to reduce problems such as congestion, accidents
and pollution emissions.
* Public transit investments often repay themselves through increased
local property values around stations. Thus, property owners (or
local governments which capture local taxes) can justify subsidies
for high quality transit.

For more information see:

Todd Litman (2005), Evaluating Public Transit Benefits and Costs,
VTPI (<http://www.vtpi.org/>www.vtpi.org); at
<http://www.vtpi.org/tranben.pdf>www.vtpi.org/tranben.pdf.

Todd Litman (2008), Evaluating Rail Transit Criticism, Victoria
Transport Policy Institute (<http://www.vtpi.org/>www.vtpi.org); at
<http://www.vtpi.org/railcrit.pdf>www.vtpi.org/railcrit.pdf.

Todd Litman (2006), Smart Congestion Reductions II: Reevaluating The
Role Of Public Transit For Improving Urban Transportation, VTPI
(<http://www.vtpi.org/>www.vtpi.org); at
<http://www.vtpi.org/cong_reliefII.pdf>www.vtpi.org/cong_reliefII.pdf.

Jeffery J. Smith and Thomas A. Gihring (2003), Financing Transit
Systems Through Value Capture: An Annotated Bibliography, Geonomy
Society (<http://www.progress.org/geonomy>www.progress.org/geonomy);
at <http://www.vtpi.org/smith.pdf>www.vtpi.org/smith.pdf.


Best wishes,
-Todd Litman


At 03:25 PM 10/10/2009, bruun at seas.upenn.edu wrote:
>Carlos and Joachim:
>
>You are talking theoretically but the request for advice addresses an
>immediate, practical problem.
>If you are going to wait until the conditions are right on the streets so
>that operations can be fast and efficient and no operating subsidy is
requird,
>and/or umtil car owners are taxed so that this money can be used to
>support public transport,
>you might be waiting a long time. The people who decide public policy often
>have a conflict of interest. They often aren't willing to raise their costs
>or restrict their driving. So, in the meaniime, public support is needed or
>nothing will improve.
>
>And, in actuality, the subsidies do often pay for themselves ecomonically.
>If even a small percentage of the money spent on private automobiles by
>the population can be saved, this might well justify the subsidy. Cities
>with good public transport spend less overall on passenger transportation
>than those that don't. The problem that policy makers often have is
>that politicians don't like to make this point, they only like to talk
>about how they are saving tax dollars but not about how public spending
>can be offset by reduced private spending.
>
>Eric Bruun
>
 >