[sustran] Re: World Bank Energy & Environment Strategy Consultation

[Todd Litman by way of tkpb at barter.pc.my Paul Barter]

Comments on the World Bank Energy and Environment Strategy Paper,
22 July 1997 Provisional Draft

By Todd Litman, Victoria Transport Policy Institute, 1250 Rudlin Street
Victoria, BC, V8V 3R7, Canada,  Phone & Fax: (250) 360-1560
E-mail:  litman at islandnet.com,  Website:  http://www.islandnet.com/~litman

(27 August Draft)

Thank you very much for allowing me to comment on this strategy paper. My
comments apply primarily to transportation issues.

The current draft fails to incorporate a large number of cost effective
transportation demand management strategies which could significantly reduce
energy consumption and environmental impacts. I strongly recommend that
these be incorporated into the final draft. Let me give some examples:

· Land use management strategies can be used to increase access (the ability
of people and firms to obtain desired goods, services and destinations)
while minimizing vehicle travel. On the other hand, an automobile oriented
land use pattern will substantially increase the amount of vehicle travel
required to maintain a given level of access (Terry Moore and Paul Throsnes,
THE TRANSPORTATION/LAND USE CONNECTION, American Planning Association,
Planning Advisory Service [Chicago], Report 448/449, 1994; Eric Damian
Kelly, “The Transportation Land-Use Link,” JOURNAL OF PLANNING LITERATURE,
Vol. 9, No. 2, November 1994, pp. 128-145.)

· Special lanes, traffic management and parking facilities can be used to
give preference to high occupancy vehicles. This gives transit and rideshare
passengers a time advantage relative to private automobile travel, which
increases the efficiency of the transportation system (see Kenneth Button,
TRANSPORT ECONOMICS, 2nd Edition, Edward Elgar [Aldershot, UK], 1993, p. 181).

· Congestion pricing can be used to reduce peak period travel demand,
increasing the efficiency of the road system as well as reducing total
vehicle use (see CURBING GRIDLOCK, Transportation Research Board [Washington
DC], Special Report 242, 1994).

· Charging drivers for roadway construction, operating costs and traffic
services (police, emergency services, etc.) through road pricing, mileage
charges or a fuel taxes will reduce automobile use compared with roads
funded through general taxes.

· Charging road users for the opportunity cost of land dedicated for roads,
and taxes on roadway rights-of-way (through road pricing, mileage charges or
fuel taxes) is justified in terms of economic efficiency, and would further
serve as a demand management strategy. Failure to charge for roadway land
underprices road transport relative to rail (which pays rent and taxes on
right-of-way), and underprices transport relative to other goods, reducing
economic efficiency. Exempting roadway land from property taxes imposes a
financial burden on municipal governments. The American Planning
Association's Policy on Transportation Planning (October 1990) states,
“Equal tax treatment requires that transportation facilities and services
not be exempted from general property and sales taxes that contribute
revenues to the general-purpose operation of government.”

· Making vehicle insurance and registration fees proportional to annual
vehicle travel can reduce total automobile use by 5-15% compared with a
price structure that is fixed with regard to distance driven (see Todd
Litman, “Distance Based Vehicle Insurance as a TDM Strategy,” TRANSPORTATION
QUARTERLY, Vol. 51, No. 3, Summer 1997).

· Charging drivers directly for the parking they use or cashing out free
parking (offering non-drivers the cash equivalent of the parking spaces they
don't use if parking is provided free) can reduce automobile use by 10-40%
(see Donald Shoup, “The High Cost of Free Parking,” ACCESS [University of
California Transportation Center, 108 Naval Architecture Bldg. Berkeley, CA,
94720-1720; phone: 510-643-5454; fax: 510-643-5456; email:
access at uclink4.berkely], Number 10, Spring 1997, pp. 2-9; Donald Shoup, “An
Opportunity to Reduce Minimum Parking Requirements,” JOURNAL OF THE AMERICAN
PLANNING ASSOCIATION, Winter 1995, pp. 14-28.)

· Employers and business districts can be encouraged or required to develop
commute trip reduction programs which encourage employees to use efficient
travel modes.

· Various strategies can be used to improve conditions for bicycle and
pedestrian transportation, and to encourage these non-motorized travel
modes. These are not only important directly, but also in conjunction with
transit (transit riders almost always become pedestrians at their destinations).

· Various strategies can be used to encourage more efficient shipping and
delivery services.

· A Pigovian tax to internalize environmental impacts of road use (road
pricing, mileage charges or a fuel taxes) would further reduce vehicle demand.

An important point, from the Bank's perspective, is that these
Transportation Demand Management strategies not only reduce energy use and
protect the environment, but they also increase economic efficiency,
productivity and development. High levels of automobile use result from
hidden subsidies, such as underpriced roadway facilities, free parking (of
course, no parking is really free, somebody must pay for it), increased
accident and air pollution damages, etc. Transportation demand management
involves removing these subsidies and giving individuals more transportation
choices than would otherwise occur. In an automobile dependent
transportation market, consumers have many choices of which automobile to
purchase, where to purchase inexpensive petroleum, and plenty of free roads,
but they often have few non-automotive travel choices.

A recent World Bank study indicates that automobile dependency reduces
regional economic development (Jeff Kenworthy, Felix Laube, Peter Newman and
Paul Barter, INDICATORS OF TRANSPORT EFFICIENCY IN 37 GLOBAL CITIES,
Sustainable Transport Research Group, Murdoch University [Perth], for the
World Bank [Washington DC], February 1997). The researchers conclude that,
“there are no obvious gains in economic efficiency from developing car
dependence in cities,” and, “There are on the other hand significant losses
in external costs due to car dependence which have clear implications for
sustainability.” They find that beyond a certain point (about 7,500
kilometers of per capita annual automobile travel), increased driving, and
the resulting automobile dependent transport system and low density land use
patterns, impose economic costs that outweigh marginal economic benefits.
They suggest that automobile consumption and the road and parking facilities
they require divert large amounts of private and public capital from
alternative uses that are more economically productive.

Similarly, an extensive recent study by the Australian Government found that
transportation demand management strategies such as parking and road user
charges, and improved transit services, are among the most cost effective
strategies available for reducing greenhouse gas emissions because of their
multiple benefits (Bureau of Transport and Communications Economics,
TRANSPORT AND GREENHOUSE; COSTS AND OPTIONS FOR REDUCING EMISSIONS,
Australian Government Publishing Service [Canberra], Report 94, July 1996.

It is also worth noting that increased automobile use does not necessarily
contribute to a nation’s industrial development. Automobile consumption may
have provided unique economic benefits during early periods of domestic
industrial growth, due to economies of scale, but not now that automobile
industries are mature. It is production and exports of goods that provide
economic benefits, not consumption. The automobile industry is now
significantly overcapitalized, reducing its profitability (see “The Coming
Car Crash: Global Pile-up,” THE ECONOMIST, 10 May 1997, pp. 21-23), so most
countries would be better off developing alternative industries and
minimizing automobile related expenditures. Most countries import petroleum,
and even domestically assembled vehicles incorporate a significant portion
of imported components. There is no reason to believe that automobile
expenditures provide more or better domestic jobs or profits than other
consumer goods. Input/Output analysis indicates that expenditures on transit
provide about 3 times the domestic employment as the same amount of
expenditures on automobile travel.

Most other transportation improvement strategies only provide one or two
benefits. For example, increasing roadway capacity reduces traffic
congestion, and vehicle improvements reduce operating costs and pollution
emissions. But Transportation Demand Management strategies often provide
multiple benefits, such as reduced traffic congestion, facility cost
savings, reduced accidents, reduced pollution emissions, energy
conservation, and increased equity (see Todd Litman, GUIDE TO CALCULATING
TDM BENEFITS, Victoria Transport Policy Institute [Victoria], 1996).

Investment Applications

Equally important from the bank's perspective are the methods used for
assessing transportation investments. Such investments “leverage” a large
amount of transportation activity. For example, if a country invests $100
million in highway improvements this may induce billions of dollars in
additional automobile and petroleum expenditures compared with the same $100
million investment in transit or other travel alternatives.

There are several common mistakes and omissions used in project investment
analysis that tend to overvalue the benefits and undervalue the costs of
increased roadway capacity (see Julia Philpott, INTEGRATED TRANSPORT
MANAGEMENT AND DEVELOPMENT, International Institute for Energy Conservation
(Washington DC), June 1995; Walter Hook, COUNTING ON CARS, COUNTING OUT
PEOPLE, Institute for Transportation and Development Policy [New York],
Paper # I-0194, Winter 1994; Walter Hook, Christopher Zegras and Thomas
Knecht, DOWNWARD MOBILITY: AN INDEPENDENT ASSESSMENT OF WORLD BANK TRANSPORT
SECTOR LENDING, International Institute for Energy Conservation [Washington
DC], Jan. 1995; Yaakov Garb, THE TRANS-ISRAEL HIGHWAY: DO WE KNOW ENOUGH TO
PROCEED?; The Floersheimer Institute for Policy Studies [Jerusalem], Working
Paper No. 5, April 1997). These include:

· Failure to offer true alternatives in the decision making process, such as
a highway oriented investment package, a rail transit oriented investment
package, a bus transit oriented investment package, and a demand management
oriented investment package.

· Failure to use an analysis framework that evaluates the full range of
benefits and costs of each investment or policy alternative. Many investment
analysis frameworks only consider facility investment, vehicle operating
expenses, user travel time and user accident risk, without considering a
wide ranger of other benefits and costs (see Todd Litman, TRANSPORTATION
COST ANALYSIS; TECHNIQUES, ESTIMATES AND IMPLICATIONS, Victoria Transport
Policy Institute [Victoria], 1997).

· Failure to properly consider the economic effects of generated traffic.
(see SACTRA, TRUNK ROADS AND THE GENERATION OF TRAFFIC, UKDoT, HMSO
[London], 1994; Peter Mackie, “Induced Traffic and Economic Appraisal,”
TRANSPORTATION, Vol. 23, 1996, p. 113; Todd Litman, DETERMINING GENERATED
TRAFFIC EXTERNAL COSTS, Victoria Transport Policy Institute [Victoria],
1996). Increased roadway capacity often does little to reduce urban traffic
congestion, instead it increased total automobile use and helps create
automobile dependent land use patterns compared with what would exist with
alternative investments.

· Overestimating the value of travel time savings with increased roadway
capacity.

· Underestimating the incremental economic, environmental, social costs of
increased automobile travel.

· Failure to consider upstream and downstream costs, such as the need to
expand surface streets and parking capacity when traffic capacity is
increased on major highways.

· Overestimating the natural (unsubsidized) growth of automobile use, and
underestimating the elasticity of vehicle ownership and use with respect to
prices.

· Underestimating long-run petroleum prices.

· Underestimating roadway right-of-way land costs.

· Failure to consider inequitable impacts on disadvantaged groups from
automobile oriented transportation improvements, including displacement,
reduced mobility for pedestrians and bicyclists, exposure to increased
accident and pollution risk, and reduced travel choices.

Recommendations

We strongly recommend that the following be added to the list of operational
and policy strategy reforms included in this report:

· All transportation plans should include comprehensive Transportation
Demand Managment strategies. These should include combinations of incentives
and investments that maximize the number of travel options available, and
provide incentives for individuals to use the most economically efficient
option for any individual trips. They should typically include full-cost
pricing of motor vehicle travel (except where a subsidy is specifically
justified and overtly funded), HOV facilities, improved transit and
rideshare programs, pedestrian and bicycle improvements, and related support
activities. In general, Transportation Demand Management strategies should
be implemented before any automobile oriented investments are made.

 · Allow Transportation Demand Management strategies to qualify for pollution
emission reduction credits on par with other strategies.

 · Improve transportation project appraisal methods used for Bank projects to
include:
  1. Viable multi-modal alternatives to be considered and compared with
automobile oriented projects.
 2. Consideration of transportation demand management in all transportation
planning.
 3. Comprehensive consideration of the effects of generated traffic.
 4. Consideration of all economic, environmental and social impacts that are
likely to result from automobile oriented transportation investments and
policies, including up- and down-stream traffic, increased accidents,
increased pollution, increased energy consumption, and reduced travel
options for non-drivers.
 5. Consideration of the impacts of increased automobile travel on
disadvantaged populations.
 6. Realistic analysis of the incremental benefits of congestion reduction.
 7. Realistic analysis of the opportunity costs of land devoted to roadway
rights-of-way.
 8. Realistic estimates of the long term price of petroleum.