Among the impacts of worsening congestion are lower wages, investment and household consumption and higher inflation. The cause, according to the report, is too many cars and the solution lies in better pricing of public versus private transport:
If these predictions are to be avoided, a big shift in public attitudes on at least two issues is required: public transport and taxation. The city is relying less on public transport and more on cars, and the best way to reverse this trend is with prices.
The report says motorists now get "heavy subsidies" for using the road. They are receiving what economists call an inappropriate price signal - that is, the true cost of the activity is not being felt by the user. The cost of using a car needs to reflect the full social and economic cost of driving. If this is done, public transport should gain a big price advantage over cars and therefore more people will be encouraged to use it. But embedded cultural expectations - especially the growing emphasis on comfort and convenience - count against public transport. The centre's modelling suggests that in the future motorists will have to pay much, much more for the privilege of driving. Attitudes to taxation and government debt will have to shift.
The full report will be available soon from the Centre of International Economics website and should make interesting (if familiar) reading.
5 comments:
I'm no economist but the article seems to be suggesting a Pigovian tax? Are there successful models of this application out there? I agree that transportation is a key in sustaining economies - but is fiddling with prices really going to be the answer in reducing traffic congestion? (not that I have an alternative solution at this time...)
We already know all about price incentives in transportation. They at best slow the rate of mode change. They cannot reverse modal choice. In the US transit is subsidized some 75% and achieves some 2.5% market share. Roads based private transport is taxed at approximately 100% of enumerable costs. Despite this transit use continues to decline. Europe has something like 50% subsidies for transit and 200% taxes on private transportation and transit use continues to decline. The problem is simple, transit is expensive. No need to look further for hidden issues. It is wholly anti-sustainable to promote transit. Wealth consumes resources and transit subsidies consume wealth. It really is that simple.
From my experience lobbying in Melbourne, price incentives are important - that is, an exorbitantly expensive ticket will turn users away - but FAR more important is the provision of a service people actually want to use. Contrary to the suggestion quote you excerpted, PT services can provide both comfort and convenience - it's far more convenient to be able to use your laptop in a train than it is to drive to work, for example.
Governments should focus on providing more and better services to attract choice passengers. One bus route in Vancouver run 15 times per hour - that's what I'm talking about.
Robert, where do those figures come from? I haven't seen figures that contradict what I'd regard as intuitive - that for most urban commuting, public transport is more cost-effective. But it's an empirical question.
Beth, I agree. The convenience factor (ie, time and comfort cost)swamps the price of a journey for most travellers, so using pricing to change behaviour is a blunt instrument if there aren't also convenient alternatives to cars.
David Jeffery said...
Robert, where do those figures come from?
The BTS (Bureau of Transportation Statistics), FHWA OHIM and NTD (National Transit Database) in the US include financial data.
The European is quite a bit more difficult to obtain as the funding and reporting are deliberately obfuscated.
With only a very very few exceptions worldwide transit requires some form of public subsidy, the vast majority are so subsidized that passenger fares do not even cover operating costs.
As to declining trends I suggest this; http://www.publicpurpose.com/ut-intlmkt95.htm
Brisbane -7.3% per decade Sydney -7.1% and a rare international exception: Canberra +6.4%
Congestion Charges work exactly as planned. They tax productivity and thus reduce economic activity thereby reducing congestion. The London experiment isn't really congestion charges anyway, it's just another way for the obsolete urban centres to extend their hand into the wallets of outsiders.
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