In July, I started taking a look at the economics of public transport fare policies. In the first part of the series, I took a look at how traffic congestion can be a rationale for public transport fare subsidies. (Parts 2 and 3 dealt with different issues.) I observed that:

In the absence of congestion pricing (and in the presence of other subsidies for driving, such as minimum parking requirements), higher public transport fares can result in a perverse outcome – additional congestion and delays for existing road drivers. This is shown in the following diagram:

PT fares and congestion diagram

Effectively, a failure to price roads efficiently means that we have to provide subsidies for public transport to prevent car commutes from being even more painful than they currently are.

But how much congestion reduction can we attribute to public transport? How much slower would car commutes be if some people weren’t travelling by PT instead of clogging up the roads? And how much is that worth to us?

It’s not possible to test this experimentally – we can’t exactly build a bunch of cities that are identical except for their PT systems and see what happens. (Transport research budgets are not nearly large enough.) However, we can observe the outcomes from various “natural experiments” that disrupt public transport systems while leaving everything else unchanged, such as natural disasters and public transport strikes.

Stu Donovan pointed me towards a recent research paper that analysed traffic speeds during public transport strikes in the Dutch city of Rotterdam. The authors, Martin Adler and Jos van Ommeren, use detailed traffic flow and speed data to model how 13 PT strikes that occurred from 2001 to 2011 affected traffic speeds. Because strikes prevent people from using PT without impeding road traffic, the outcomes observed during strikes give us some indication of what would happen to congestion in the absence of PT.

If you’re interested in knowing a bit more about the topic or the methodology, I highly recommend you read the paper. (It’s an excellent paper!) Here, I’d like to focus on a few key findings from the analysis.

First, the authors found that PT helps to speed up car journeys by reducing the number of people driving:

We demonstrate that during a citywide strike, car speed within the city decreases by about 10%. For highways, strikes exhibit a much smaller speed reduction of about 3%. During rush hours, the reduction in speed is more pronounced. These results imply that during rush hours, public transit provision reduces car travel time on inner city roads by about 0.2 minutes per kilometer travelled, whereas it reduces car travel time on highways by 0.02 minutes per kilometer. Hence, for cities such as Rotterdam, travelers on inner city roads benefit much more from public transit provision than highway travelers.

Intuitively, these results make sense. The benefits of PT for drivers are much higher in busier areas, such as Rotterdam’s inner city roads. However, Rotterdam’s ring road highways still derive some benefits.

The second interesting finding is that the popularity and ease of cycling in Rotterdam – even though it’s not exactly leading by Dutch standards – cushioned against some of the negative impacts of PT strikes:

a full-day citywide strike increases bicycle flow by 24% implying that a large share of travelers switch to bicycle use (rather than car use), which presumably reduces the car flow increase and therefore the speed reduction of a strike. Bicycle ownership and use is much higher in the Netherlands than in other countries in the world, so this result is likely specific to the Netherlands.

In other words, the availability of multiple congestion-free networks – public transport and cycling – meant that the roads didn’t have to accommodate all of the people who couldn’t get on the bus on strike days. In other words, the availability of multiple transport choices enhanced network resilience.

Third, the authors calculated the value of congestion reduction benefits attributable to public transport in Rotterdam. Based on some plausible assumptions about journey lengths and the value of time, they estimate that:

The annual public transit congestion relief benefit is then about €95 million (assuming 252 working days), so about €79 per inhabitant. This excludes any benefits of public transit provision on weekends that we assume to be negligible, so this is likely an underestimate. Given 721 million public transit passenger kilometers (OVPRO, 2014), the congestion reduction benefit per public transit kilometer is €0.13. This benefit is substantial given that the cost per public transit kilometer is €0.46.

In addition to congestion welfare losses there are rescheduling costs to car travelers. [Note: only 55% of the reduction in PT trips on strike days was balanced out by the increase in car and bicycle trips, meaning that a large share of people chose not to travel.] We do not include these costs, nor do we include the loss to public transit ticket holders or any other external cost of car driving that are likely an order of magnitude smaller than the effect through congestion.

The costs of providing public transit in Rotterdam are partially covered by subsidies, about €0.28 per public transit kilometer. So, the congestion relief benefit is about 47% of subsidies.

This is a really interesting finding! It puts a monetary figure on the congestion relief delivered by PT. (For Rotterdam, at least.) And, interestingly, it’s a large enough figure to justify a good proportion of PT fare subsidies. There are also other rationales for fare subsidies that I haven’t discussed here, such as social equity for people without cars and various types of network effects in PT provision.

But even if we leave those aside, this finding suggests that drivers should be happy to spend some fuel tax revenues to subsidise public transport.

What do you think about congestion and public transport?

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  1. Great post Peter. NZTA need to read this and take it on board. And so should Maurice Williamson and Jami-Lee Ross who don’t seem to have any vision beyond the next ten minutes.

  2. Peter I understand the passion about PT but could we please stop the motoring subsidy fallacy. Owning, driving,maintaining, insuring, fuelling and parking a vehicle is not a cheap exercise in Auckland.

    1. Many things are both expensive and subsidised. For example, Auckland’s public transport fares are relatively high compared to a number of other cities, but that doesn’t mean that they aren’t subsidised. Same deal with driving.

      Also, I’m not sure you actually read the post, which discusses how PT provides benefits for drivers by reducing congestion.

    2. And it’s not just subsidy from the government.

      Suppose your employer offers you a free car park. Then:
      — if you drive, you get a free car park. That’s about $50 per week worth of subsidy by your employer.
      — if you come by bus or bicycle, you get nothing. (or not as much, a bicycle park is much cheaper than a car park)

        1. This would be something worth campaigning to get changed. If you removed the FBT from employer subsidised PT then I certainly think you would get a lot more people using PT. take it a step further and let businesses have it as a tax deduction and it would certainly be a good incentive.

        2. And there was complete outrage at the suggestion that this subsidy be removed, which resulted in the government backing down on the completely sensible implementation of application of FBT to onsite carparks. It would seem that anything to do with removing carparking or access to such is completely off limits in this town.

      1. If you work in the city it is more like a $85 per week subsidy (5 days x $17) for which in before tax income you would have to be paid about $120. And the employer will have to pay fringe benefit tax.
        Surely it makes more sense for the employer to top up a Hop card every week?

    3. You obviously dont understand subsidies. Cars are highly subsidised because they a proportion of their economic costs on others. Doesn’t have anything to done with monetary costs to users.

  3. In the Rotterdam excercise I wonder if they measured the Retail turnover during that period. I imagine in that sort of environment there would be lot of shoppers stating close to home.

  4. Fare subsidy aside, it doesn’t always matter if PT reduces congestion or not. As long as people think it does there will be support. Light rail projects in the US have won support from suburban areas because people think it will speed up their commute if other people’s cars are taken off the road.

    1. I see what you’re saying about public support and perceptions playing an important role. However, I think it matters quite a lot whether claims that PT reduces congestion are true or not. For one thing, if things don’t turn out as project boosters say they will, it can lead to a backlash that makes it more difficult to implement similar projects in the future.

      Put it this way: if somebody made an untrue but superficially appealing argument about a project that you didn’t support, would you think it was a good thing? Or would you think they were a bit of a weasel?

      1. eg. Build a convention centre and it will generate many millions of benefit to the local community?
        Pokie machines are no problem; only gamblers use them, amd if we don’t provide them someone else will!

  5. the other aspect not noted here is removing buses from the traffic flow, buses leaving stops and their slower acceleration from red lights or give ways does slow other road users (not that I’m complaining mind, 40 plus people on a bus have a natural right of way over half a dozen single occupant cars) and removing buses from the traffic mix would also diminish delay to other users

    this factor might speed individual journeys in the peak compared to other transference factors which wouldn’t affect traffic flow, but would rather extend the shoulders of the peak through greater traffic volume

  6. The mathematical argument alone of putting more people on public transport is compelling. With say 20% less cars on a congested stretch of road those remaining can obviously move more quickly.
    If you want the physical proof then the Harbour Bridge seems compelling, where traffic appears to flow more quickly than it did pre NEX. It would be interesting to see actual traffic speeds are.

  7. During the school holidays there is a very noticeable reduction in congestion. I don’t know how many fewer cars are on the road It would be a lot of people not working or working different hours as well as not dropping of kids.
    However the point is that this gives us a good indication that if enough people use PT then we should expect it to effect congestion or vice versa. Also on a wet day congestion gets worse, part of this is that traffic may drive slower (for good reason) in the wet. But probably fewer people using PT or active modes and driving instead is a major contributing factor to the extra congestion experienced.

    1. I suspect the only reason the school holiday traffic flows as well as it does is because the holidays are too short for people to adjust their behaviour to take advantage of the extra road capacity.

      If the holidays were longer people who drive earlier or later in the morning would move their trip closer to the peak, and some who take PT would shift to driving, and traffic would end up congested again.

      This is why there is a limit on the effect PT can have on congestion. The capacity in the road created by people shifting to PT will be filled by other drivers in the same way a widened road induces traffic. Good public transport can change the equilibrium between roads and PT and make traffic flow faster like the northern busway has done for the northern motorway. But this is always limited by the fact that people will start driving again if congestion is reduced enough.

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