The National Infrastructure Commission has published an interesting discussion paper on capturing the value of urban transport investments. The starting point is the recognition that average travel time changes little, which means that travel time savings do not provide a reliable basis for valuing new investment. The Commission proposes an approach that focuses on valuing agglomeration benefits plus consumer benefits as these increase with increasing population density. Agglomeration benefits have for some time been recognised as appropriate for inclusion in cost-benefit analysis, but a direct estimation of density-dependent consumer benefits is novel.

The NIC paper is welcome fresh thinking, although not without raising issues for consideration. A supporting study commissioned from consultants SDG estimates that the utilisation of available theoretical transport capacity to access city centres ranges from 20% (small cities) to approaching 70% in the 0800-0900 peak hour. There is therefore considerable capacity underutilisation in all cities studied. However, London was not considered. It is possible that capacity utilisation in London is substantially higher, reflecting the pressures of population and economic growth. If so, this would suggest that adding to transport capacity in other cities would not be crucial to stimulate economic growth in the near term. It may not be valid to assume that enough latent demand exists that any additional capacity added will be used.

More generally, while transport capacity can act as a constraint on economic growth, justifying investment in expanding cities, other kinds of investment may be more cost-effective in stimulating lagging cities. This might be investment in broadband, for instance, or in improvements other than infrastructure that falls within the NIC’s remit.

The SDG approach focuses on capacity to access city centres and disregards the potential of faster and reliable travel, as offered by light rail or BRT, that would increase the size of travel to work areas. A study of travel in Birmingham, which has only a single light rail line, prompts the hypothesis that by relying on buses that get caught in congestion at peak times for public transport, Birmingham sacrifices significant size and thus agglomeration benefits, compared with cities of a similar size in France which rely on trams and metros.

Nature of benefits

Estimations of agglomeration and amenity/consumer benefits are based on elasticities derived from econometric studies of correlations between inputs and outputs, controlling for confounding variables. Such benefits are not observed directly and this respect they resemble travel time savings, which are based on the output of models, but not observed in practice. Moreover, the confounding variables are not insignificant, given the typical scatter of data points in plots to quantify agglomeration effects, which suggests that there may be many other possible interventions that might be made, other than those focused on travel.

What is observed as the result of transport investment are changes in land use and market value, the subject of a study for the NIC by the Institute for Fiscal Studies. Increases in real estate values reflect increases in agglomeration and amenity. Arguably, such increases in value would be the basis for a more grounded approach to appraising urban transport investment, more aligned to real world investment decisions.

Although the NIC discussion paper is concerned with urban investments, the approach is applicable to transport investments generally.

 

 

 

 

 

 

The Greater Cambridge Partnership (GCP) arranged a Citizens’ Assembly, comprising some 60 representative members of the community, that met over two weekends to consider transport options that would reduce congestion, improve air quality and provide better public transport. The Assembly heard evidence on these issues from experts, both independent and staff of the GCP. I was present throughout as an expert advisor.  There was extensive discussion by small groups at tables, effectively facilitated by staff of Involve, a charity established to promote public participation in decisions. The GCP was at pains to avoid steering Assembly members to a preferred conclusion, which was achieved, in my judgement.

The context is that the GCP agreed a City Deal with the Coalition Government worth £500m over 15 years, aimed at tackling the transport requirements of a growing city. Cambridge has an historic city centre that constraints both property development and transport provision, so that new businesses, many spun out of university research, are located around the periphery. Travel across the city between homes and employment is impeded by the narrow street network. Cambridge has an effective dedicated north-south busway along a previous rail route, and further such routes are planned. But the problem of the congested centre remains.

The second weekend of the Assembly focused on practical measures, leading to voting on preferred options, the results of which have been published. There was strong support for closing roads to cars, to allow faster and more reliable buses and to encourage walking and cycling, as well as to reduce air pollution. There was also good support for road user charging, to raise funds to invest in public transport and active travel. There was less support for measures to limit or charge for parking, and relatively little preference for no interventions.

The Assembly also voted on a wide range of supporting measures. The most popular was to put in place a franchised bus service under the Mayor, like that operated in London, in place of the present privately operated buses.

Assessment

The conclusions of the Assembly were a sensible response to the travel problems experienced in Cambridge and the surrounding area – a policy package comprising revenue generated from motorists to support investment in public transport and active travel, plus more road space for these purposes. The GCP is likley to find it difficult to reject this outcome, not least because the funding from the Government comes in tranches that have to be justified by showing progress towards tackling the problems for which the funding was promised.

More generally, this experience indicates that a Citizens’ Assembly may be a more effective means of carrying forward policy in problematic areas, particularly where conventional consultation exercises are likely to stimulate more negative responses from those who believe they would be adversely affected while those who may benefit tend to stay silent.

The Financial Times’ Alphaville blog has noted that Uber London Ltd’s accounts filed at Companies House refer to discussions with HM Revenue and Customs about a potential liability for VAT at 20% on either gross bookings or the service fee that Uber charges drivers. This liability may depend on the outcome of a case that Uber is appealing to the Supreme Court to determine whether drivers are self-employed or are ‘workers’ with employment rights. The threshold for VAT liability is £81k a year, so individual drivers are unlikely to be liable. But if Uber is deemed to be an employer, the company would be liable, with potential backdating.

The VAT threshold means that there is not a level playing field for taxi type services. Self-employed drivers, such as the owner-driver of a London black cab, would be at an advantage over a ride-haling company that employed many drivers.

This piece was a guest blog in the newsletter of the Transport Knowledge Hub, a free resource aimed at providing local-decision makers with tools and information to make transport investment decisions which facilitate inclusive and sustainable economic growth.

In my new book, Driving Change: Travel in the Twenty-First Century, I assess the likely impact on travel behaviour of new transport technologies, in particular electric vehicles, digital platforms, digital navigation and autonomous vehicles.

Electric vehicles eliminate tailpipe emissions and so help improve urban air quality and mitigate global warming. Yet a change of propulsion does not change the basic characteristics of cars or buses.

Digital platforms help match supply and demand and have made possible online shopping, which has contributed to reduced numbers of shopping trips. Digital platform apps on mobile phones, exemplified by Uber, facilitate finding a ride-hailing taxi or a rental bike and are understandably very popular. They may tempt people away from buses, but they can also complement regular public transport by meeting the need for ‘last mile’ travel. When the Night Tube opened in London, the pattern of late-night Uber trips changed, from centre-to-home to suburban-station-to-home.

Digital platforms permit vehicle sharing by people travelling in the same direction. Some commentators see this as the answer to road traffic congestion, in that higher occupancy would allow travel demand to be met by fewer vehicles. However, congestion arises in locations where both population density are car ownership are high, so that there are more trips that might be made by car than the capacity of the road network permits. Some potential drivers are deterred by the prospect of unacceptable delays and make other choices – a different time, mode or destination of travel, or not to travel at all. Congestion is therefore generally self-limiting, in that if traffic builds up, delays increase and more road users are deterred. Conversely, measures to reduce traffic tend to have little impact on congestion because the initial reduction in delays then releases previously suppressed trips. So increased vehicle occupancy is unlikely to make much impact on congestion.

Digital navigation devices, such as Google Maps or Waze, offer optimum routing that takes account of congestion. They also predict journey times in advance, which is the best means we have to mitigate the impact of congestion, given that what bothers people most is the uncertainty of how long a trip will take in congested traffic.

Autonomous vehicles – driverless cars – are attracting enormous interest and investment, both by established auto industry businesses and new entrant tech companies. As yet, there is only very limited evidence of impact from pilot trials and simulation studies.

The main historic transport innovations have allowed faster travel and so a step change in access to desired destinations and services – the railway in the nineteenth century, the car in the twentieth, the modern bicycle in its heyday before the mass market car, and motorised two-wheelers today in low-income countries. Similarly, a series of electronic and digital innovations have permitted a step change in virtual access to people and services – the telegraph, telephone, radio, television, internet, broadband, smart phone, social media. All these innovations have stimulated huge investment, rewarded by the returns from increased access.

In contrast, the new transport technologies seem unlikely to lead to any significant increase in speed of travel. They will therefore not be transformational. Rather, they offer incremental improvement to the quality of journeys and possibly some cost reduction.

Public transport is benefiting from digital technologies for travel information and payment. On the railway, digitised signalling and train control permits shorter headways and hence increase capacity of existing track. For buses, the main constraint is the difficulty of creating segregated routes in dense urban spaces. Nevertheless, there are opportunities for public authorities to encourage technological innovation that aligns with their strategic objectives for movement and place making.

 

 

 

 

 

 

A noteworthy report from bank BNP Paribas, summarised in the Financial Times, compares the energy return on a $100bn outlay on oil and renewables where the energy is being used specifically to power electric vehicles. The  analysis indicates that new wind and solar-energy projects in tandem with battery EVs will produce 6x-7x more useful energy at the wheels than will oil at $60/bbl for gasoline-powered cars and vans, and 3x-4x more than will oil at $60/bbl for those running on diesel. The conclusion is that oil cannot compete with renewables when viewed over the investment cycle unless oil prices are below $20/bbl, which would make oil investment unattractive. This is before taking credit for eliminating tailpipe emissions of carbon and noxious pollutants.

The report’s conclusion is striking – the death toll for petrol. With 36% of demand for crude oil today accounted for by cars/vans and other vehicle categories susceptible to electrification, the oil industry has never before in its history faced the kind of threat that renewable electricity in tandem with EVs poses to its business model: a competing energy source that (i) has a short-run marginal cost of zero, (ii) is much cleaner environmentally, (iii) is much easier to transport, and (iv) could readily replace up to 40% of global oil demand if it had the necessary scale. The conclusion is that the economics of oil for gasoline and diesel vehicles versus wind- and solar-powered EVs are now in relentless and irreversible decline, with far-reaching implications for both policymakers and the oil majors.

In the short run, however, the huge existing investment in oil supply makes this source competitive with renewables/EVs that require substantial infrastructure investment to bring forward new supply.

An interesting report, from a new organisation called Transport for New Homes, examines a number of greenfield housing developments in Britain, criticising most of them for generating excessive car dependence. This is in part due to location away from existing centres, and in part to disregard of public transport possibilities in the planning process. Generally, the arguments are well made. However, what is missing is survey evidence of the experiences and attitudes of occupants of these new houses. The BBC reports a couple of anecdotal examples of dissatisfaction of residents. Yet these may not be typical since those whose choose to live in such housing may prefer the car to the public transport, walking and cycling alternatives. After all, car dependent lifestyles are adopted by choice by many residents of cities where alternatives exist.

The developers of new greenfield housing construct new properties to sell, which they of course do, reflecting the need for new housing and the preferences of many for location away from traditional urban centres. The lack of public transport provision tends to arise from the relatively small scale of developments, in a context in which bus use is generally on the decline. The report discusses some developments of new urban quarters in the Netherlands, where the scale and location adjacent to existing towns means that good public transport provision is feasible. One example, Almere, is a planned city built on land reclaimed from the sea, which makes large scale development possible. In Britain, assembling land on that scale has not been attempted since the post-War new towns.

It would be worth considering innovative approaches to transport provision for greenfield housing developments, for instance as in Pinellas County, Florida, where residents can use a subsidised Uber service to reach the core bus routes – known as ‘micro-transit’.

A recent transport innovation with potentially a big impact is the dockless bike – for hire in urban areas but not linked to a permanent location or installed by or with permission of the local transport authority. Dockless bikes are linked instead to an app on the mobile phone, which allows payment for use, and are installed by entrepreneurs who see a business oportunity.

Dockless bikes have made a striking impact in China, with large numbers flooding the market and huge surpluses piling up – literally, as recent photojournalism in The Atlantic magazine vividly illustrates. Presumably, economic considerations will restore a balance between supply and demand in due course.

A witty follow up article in Slate shows pictures of extensive arrays of dockless vehicles in the US – in this case parked cars.

Another stage on the long-running saga of expanding the capacity of London’s Heathrow Airport is marked by publication of a report from the House of Commons Transport Committee. This considers the Government’s Airports National Policy Statement, which endorses the proposal for a third runway at Heathrow. The Committee goes along with this, subject to quite a number of caveats about environmental impacts and costs.

What struck me were the weakness of the case for a third runway (the Northwest Runway, NWR), as revealed by the Committee’s findings:

Figure 3 on p17 shows that the main impact of the runway would be to increase the numbers of leisure travellers and international transfer passenger. The extra numbers of business travelers are very small, yet the case for the runway is mainly based on the needs of the UK economy.

‘The benefits and costs the NWR scheme are finely balanced. Even small changes in assumptions or methodology could mean that the monetised costs of expansion via a NWR would outweigh the benefits.’ (p19)

While Heathrow is ‘full’ in respect of aircraft movements and landing/takeoff slots, it is not yet full in terms of passenger throughput since each plane is on average only 76% full and is not always an  aircraft with the highest capacity (p40). Luton and Stansted have the equivalent of around one third of a runway to spare through to 2050. This means that passenger throughput for the London airports is forecast to rise by 27% out to 2050 without expansion at Heathrow (p42)

The forecasts  show that an expanded Heathrow would accommodate more than three times more outbound passengers than inbound passengers (p48), a net economic deficit to the UK.

The NWR scheme would only offer only one new destination to emerging and fast-growing economies when compared with no expansion by 2050 (p49).

Airport charges at Heathrow are the highest in the world (p82). Could a further runway be financed without increasing charges, which would erode the economic benefits and deter use?

Assessment

I am struck by the weaknesses in the case for building another runway at Heathrow. A key question for the future will be the ability of the airport to finance construction from private sector investors at a cost – both construction and financing – which the airlines and their passengers will be willing to pay via landing charges. The proposal may achieve planning consent but could prove to be commercially unviable.

Professor Anne Graham and I submitted evidence to the Transport Committee, which argued that the market for air may be more mature than generally supposed, and hence demand growth may be less than projected, with consequences for the business case.

 

The Transport Committee of the London Assembly has published a report on future transport technologies in London, covering Connected and Autonomous Vehicles, App-based services (Uber and dockless bikes) and drones. This is a useful review of the prospects for these technologies, which draws attention to aspects of governance and regulation where the existing framework is inadequate for innovative technologies.

I was recently involved, as a member of an expert Panel, in a study, Older Canadians on the Move, carried out by the Council of Canadian Academies. This had been commissioned by the Federal Government and focused on measures that might be taken to improve the mobility of older citizens primarily for longer distance travel, local travel being the responsibility of lower tiers of government. Nevertheless, we did recognise that longer trips started locally and so were concerned with door-through-door journeys.

The Panel identified three pathways to help facilitate door-through-door journeys for older adults and improve the inclusivity of the Canadian transportation system: advancing human and social resources; advancing technology and infrastructure; and advancing policy. Each pathway has an important research and development and innovation component, whether it be through the development of new technologies or the testing and implementation of research-driven solutions in real-world settings.

I have also contributed a chapter to a book edited by Charles Musselwhite on Transport, Travel and Later Life, on the topic Future Transport Technologies for an Ageing Society: Practice and Policy. Let me know if you would like to see this.