5 Mar 2018

Free public transport to reduce air pollution?

Ankita writes:*

Germany wants to trial free public transport in five cities to fight air pollution. “We are considering making public transport free of charge in order to reduce the number of private cars,” three German ministers wrote to the EU environment commissioner, as reported by The Guardian. While the idea is promising, previous experiments with free public transport in cities such as Hasselt (Belgium), Tallinn (Estonia) and Aubagne (France) have not always shown a clear correlation between free public transport and reduced car use/improved air quality. In order to understand why this could be, I explored what determines demand for public transport on the basis of TRL 2004 [pdf] and Polat 2012. The results can be summarised as follows:
  1. Fare: The fare is the easiest to identify, quantify and adjust. However, its effect on the traveller (the price elasticity of demand) varies based on gender, age, income, access to alternative mode of transport, reason of travel, climate, familial status and type of public transport in question (train, bus, tram etc).
  2. Travel time: Amount of time it takes to go from point A to point B (taking into account the proximity of the transport station from both points), frequency of service, time aboard, transfer time, travel distance determine total travel time, which is part of the cost to the traveller.
  3. Quality of service: Reliability in terms of reaching a destination at the scheduled time, comfort, safety, waiting environment (safety, temperature), ease of use (how low is the threshold for understanding and using the public transport?) all play a role in the level of demand for public transport.
  4. External factors: Population density (is the traveller going from/to an urban or rural area?), availability and costs of alternative modes of transport (car ownership? Is biking/walking possible?), parking availability and price, climate, and so on all matter.
The point is that the fare is not the sole determinant of demand for public transport. Although reducing the price to zero is likely to increase the quantity demanded, the crucial question is actually whether the fare is the correct factor to adjust if the goal is to get people to switch from cars to public transport. For car-users, travel time, comfort, ease of use, reliability and proximity to public transport station are likely to affect demand for public transport as much as, if not more, than the fare. Furthermore, it has been shown that free public transport can also have the unintended effect of attracting travellers that may have otherwise walked or cycled, which means that those travellers are actually contributing to more pollution.

Bottom line: Price is not the only determinant of demand for public transport, and public transport is not a direct substitute for cars. Increasing the price of using a car so that it reflects the true cost to the environment is likely to be a more effective way of reducing car use and improving air quality.

* Please help my environmental economics students by commenting on unclear analysis, other perspectives, data sources, etc. (Or you can just say something nice :)