Summary
Summary Advanced Transport & Marketing TRL4863 Notes
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Alternative ways of funding public transport- Public transport refers to a collectie transport system, which is made aiailable
usually against payment, for any person who wishes to use it. An important
characteristc of public seriices is that state and local goiernment are normally
iniolied in fnancing and operaton, because public transport is ofen an
unproftable business actiity
Financial assistance for public transport
Subsidy
- A subsidy is a payment that does not require a direct exchange of goods/seriices of
equal market ialue in return; it is used to accomplish a specifc obbectie or has a
specifc efect
Why Subsidies
- First public transport is being marked as a decreasing cost industry. Fixed costs are
large and iariable costs are relatiely small. Public transport companies usually
operate at less than capacity so marginal costs for an extra passenger is relatiely
low. Therefore, if price is set equal to the marginal costs, public transport operators
will sufer a loss as marginal cost is less than aierage cost
- Second argument refers to an indirect form of positie externalites of public
transport. (switching modes of transport to reduce polluton, congeston and noise)
- A mabor argument for subsiding transit is the redistributon of income to certain
groups. It transfers real income in the form of transit seriice rather than cash. (the
poor will beneft most from this)
Funding sources for transit; unconventional charges and taxes
1. Employer/employee taxes
- As simple, low cost and practcal mechanism that can be iery efectie in proiiding a
reliable and substantal fund.
- Possibility of companies/ public to locate outside public transport accessibility areas
2. Property related taxes
- propertes paying regular and contnuous amounts to local or regional
goiernment, which then earmarks a specifc amount to subsidise public
transport
- a simple, low cost and practcal mechanism that can be iery efectie in
proiiding a reliable and substantal fund
3. Development levies
, 3.1 – deielopment charges whereby part of the cost of transport would be recoiered
by special charges on diferent land uses, usually leiied at the tme of new
deielopments
3.2 – beneft sharing ted specifcally to the increase in property ialues resultng from
public iniestment
3.3 – density bonusing in the iicinity of public transport statons whereby
partcipaton in a program is ioluntary. Deielopers choose to partcipate and receiie
extra density or extra permission to build, but they pay for them
3.4 – connecton charge whereby a property owner pays specifc fee to be connected
directly to the transit system
4. Parking charges and fnes
- A simple, low cost and practcal mechanism proiiding a substantal fund
- Acceptable and transferable system
- Linked to both transport and eniironmental policy
5. Charges for the use of road space
- A fexible and transparent system with a large potental to support public
transport
- Linked to both transport and eniironmental policy
6. Local motoring taxes
- A large source of reienue, depending on traiel paterns
- Transferability depends on existng tax structure
- Acceptable as fuel taxes are common practce
- Linked to both transport and eniironmental policy
7. Consumpton taxes
- Signifcant source of reienue although infuenced by external factors
- Tend to be acceptable as iotng is necessary
8. Cross-utlity funding
- A simple system to collect and easy to understand
- Efficient as it proiides a specifc seriice which might not haie run otherwise
Determination and evaluation of trafc congestion
- Trip tme reducton is one of the mabor benefts in transport economic
eialuatons/probects
, - The growing traffic congeston, is characterized in the public opinion as a waste
of tme and money that should preferably be eliminated by means of increasing
the road capacity.
- The tme loss on road iehicles because of traffic congeston, is determined on the
basis of roughly estmated queue lengths, tme periods of congeston and mean
queue speed.
Assessment of congestion costs
- Congeston costs are part of the external costs of road transport, like the costs of
accidents, noise, polluton, space consumpton and physical or iisual barriers.
Their signifcance is to a large extent tme and locaton sensitie
- Improied iehicle technology, higher safety standard of roads, eniironmentally-
friendly accommodaton of road infrastructure, as well as dynamic traffic
management may contribute to a reducton of external costs, the contnued
growth in car ownership and mobility is likely to outweigh the faiourable impacts
- Iniestments in road transport increases net social welfare only if the total social
benefts exceed social costs.
- The estmated congeston tme loss is broken down into commuter, business,
freight and other traffic and ialidated by specifc ialues-of-tme.
Countermeasures in metropolitan areas
1. Upgrading of capacity
2. Demand management
3. Trafc management
1. Upgrading of capacity
- The increase of road capacity consists of building new motorways and bunctons,
adding lanes to existng links at bunctons, increasing the lane width of sectons
with less-than-standard cross secton and upgrading the alignment, length and
width of slip roads
2. Demand management
- The main tools of demand management are stmulatng the use of other than
congested road links, encouraging the use of heaiily loaded links at of-peak
periods, introducton of road pricing and supportng the constructon and use of
other modes and transport
3. Trafc management
- Congeston can be limited or eien aioided by means of infuencing traffic low on
site
- Traffic management is characterized by the control of access to the network,
speed control and by the creaton of dedicated lanes for trucks, buses or high
, occupancy iehicles. It is based on the coniicton that the indiiidual road user is
unable to estmate the impact of his/her own behaiiour on the stability of traffic
fow in the network or to reach adequately upon downstream incidents
- Dynamic control of iolume and speed of the traffic fows on a network leiel can
assure a high degree of occupaton of the network at predetermined maximum
traiel tmes.
Notes
- Essental for any successful strategy to maximize the social benefts of transports
and to minimize the costs of traffic congeston is a combinaton of efficient
transport economy measures, sustainable road design and intelligent traffic
control
- Transportaton systems proiide personal mobility and facilitate local and
internatonal commerce, but they also contribute to adierse efects on the
eniironment. Negatie externalites from transport include productiity losses
from congeston and poor infrastructure, health problems from air polluton and
lack of physical actiity, and traffic fatalites.
Private instruments
Debt
- Debt iniestment comprises the mabority of priiate sector fnance for transport.
The most common form of debt iniestment in transport is commercial bank
loans.
- Coniersely, bonds are an atractie debt instrument for priiate iniestors. They
are the dominant asset class in portolios from pension funds and insurance
companies that iniest in transport infrastructure.
Equity
- The role of priiate equity is ancillary to debt for transport iniestment probects.
- With debt fnancing more difficult to come by, priiate iniestment in transport
has increased in recent years.
Financing options for transport infrastructure.
- Infrastructure probects, by their nature and purpose, are unique and diferent
from other priiate sector probects. Because of their public good characteristcs,
indicatng the essental nature of their seriices for day-to-day life, they iniolie
many agencies and stakeholder.
- The probects demand large sums and they typically haie long-gestaton periods.
Positie net cash fows accrue only when they probect is well into the operaton
phase.
Financing options
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