GG 541
November 6, 2008
Basic Demographic Trends
Population growth in US twice as fast as in Europe
Urbanization - about 75% and over in USA, UK,
Canada, Netherlands, Germany & France
Variable elsewhere
Price of car ownership and use higher in Europe
as compared with USA.
Explains lower levels per capita of
car ownership & use.
Car ownership and use grew from 1970 to
1992 in US and Europe, but at considerably
different rates
- faster growth from lower ownership base
- gap narrowing between countries
Model Split
Auto share of total motorized trips:
over 95% in US
40 - 90% in Western Europe cities
20 - 50% in Eastern European cities
Bicycling & Walking: 15 - 50% in European cities
(average 30%)
5% in US
Differences between European &
US Policies
Europe
In Europe, here was expansion of public transport services,
lower public transport fares, traffic priority to public
transport. Big enhancement of facilities for pedestrians
and cyclists (car-free zones, bikeways).
Within Europe differences between UK and continental
countries (France, Netherlands, & Germany)
UK reduced subsidies, while the continental countries
increased them [between 1975 - 1990, public transport
use increased by 58% in France and declined by 26% in
the UK]
Trends in Urban Land Use Patterns
Extreme decentralization of population and economic
activity in N-S SMSAs.
European metro areas are also decentralizing but not to the
same extent.
42% of that European largest metropolitan areas live in the
central city. The corresponding figure for 10 largest US
SMSAs is only 26%.
Similar differences between US and Europe
in the spatial distribution of economic
activities in SMSAs
Financing of Urban Public
Transport
Public transport revenues covers only a
portion of operating expenses
About 1/3 in Italy & Netherlands
40% in US & Sweden
50% in Canada & France
60% in Germany
Fare Recovery Ratio in Urban Public
Transport in
Selected Countries (1992 or latest available year)
Country
Ratio
Canada
France
Germany
Italy
Netherlands
Sweden
USA
53
55
60
22-30
28
44
43
The Pros & Cons of Subsidizing
Three Pro Subsidy Arguments
Argument 1.
Motorists do not pay full marginal social costs of auto use,
so transit subsidies are necessary to insure that travel
choices between private & public mode are not distorted.
Subsidy second best, if auto use cannot be properly
priced.
Pro Argument 2.
Public transport is characterized by economics of
scale, so that fares set at marginal costs will be
insufficient to cover total costs.
Economies of scale more likely in rail than in bus.
Pro Argument 3.
Poor & disadvantaged persons more dependant on
public transit.
Transit important to assure that such persons participate
in society.
Con Arguments for Subsidy
Con Argument 1.
Direct price elasticity of demand for transit -0.1 to -0.5
(typically -0.3).
Cross elasticity of demand for auto trips with respect to
public transport very small - transit subsidies a costly
way to correct for mispricing of auto use.
Con Argument 2.
Increasingly transit users are affluent individuals
commuting from the suburbs to the central city.
Con Argument 3.
Most of the subsidies captured by higher wages
or reduced productivity.
Since 1964, federal grants are available in US for capital
improvements (up to 80% now).
Operating grants (much less generous) available since 1974
and distributed to cities on the basis of a formula rather
than for specific projects.
Preference for rail over other projects