Sustainable urban transport strategies and job creation

Christophe Heyndrickx (TML)Rodric Frederix (TML)Joko Purwanto (TML)

Overview• Empirical facts on urbanization • Basic urban economic theory• Urban policies• Results from case studies• Job creation effects• Conclusion

04/22/23 2

Why the city?

04/22/23 3

Source: World Urbanization Prospects (2012)

The world is becoming more and more urban. By 2050 – 85.9 % of the population in the developed world and 64.1% of the developing countries will live in an ‘urbanized’ environment

Socio-economic transition = larger and denser urban regions with intensive use of transport networks

What is the city - theory

04/22/23 4

• Benefits of agglomeration of activities CITIES =

+ Positive returns to scale (scale economies)+ Specialization + Spill-over effects between economic activities+ Reduction of transport costs in firm-firm, worker-firm and consumer-firm interactions

04/22/23 5

SCALE ECONOMIES SPECIALIZATION

1 large firm with 100 employeesProduces more than

100 firms with 1 employee

Large cities = higher diversity of activities – labour is more

productive than in smaller cities (access to different skills –

input/output markets)

04/22/23 6

SPILLOVER between economic activities

Take example of the mall. People start with idea of buying shoes, but end-up going to the clothes and toy stores. => Positive external impact on profits

‘Natural’ advantage of central location to reduce transport costs

As old as the Central Place Theory of Christaller (1933)

• There is a central business district where all ‘jobs’ in the city are located• Every employee gets the same wage, y• Total transport costs increase linearly when moving away from the center

with TC = t. x • Every consumer uses either housing or a ‘numeraire good’ let’s assume this

is food (bread). • Food costs the same anywhere, but housing varies in cost.• The location of consumers is IN EQUILIBRIUM, which means that everybody

choses a location where people are equally well off (GET SAME UTILITY)• There are no moving costs!

The ‘workhorse’ model – The Alonso-Mills-Muth model (1964-1966)

Understanding the equilibrium

Utility curve

Consumption of food

Consumption of housing

What do we take from this?• Intricate link between the transport system, housing, land prices and the

system of urban settlements• Urban systems with very low transport costs -> spread out remarkably far

from center and low population density• Link between highways and rise of suburban settlement (Baum-Snow N.,

2007)• If cost of transport is too low (unpriced externalities) cities are too big and

lower efficiency of land use. • Pricing externalities (congestion, environmental damages, accident costs,

etc.) also leads (on longer term) to smaller cities with a better functioning transport system

• Introducing a system of road charging, f. ex. Small & Verhoef (2007) or Anas A. et al (2006) leads to denser cities and the social optimum. However no single country has introduced a ‘universal road charging’ system

04/22/23 9

From theory to practical urban policy

04/22/23 10

Link with transport policy scenarios

04/22/23 11

Transport policy scenarios

Urban policy in NICHES and NICHES + projects

1 & 2 Fuel efficiency of cars (and full economy)

Policy strategy for clean vehicles (NICHES)Joint procurement of clean vehicles (NICHES)Biogas in captive fleets (NICHES)Environmental data management (NICHES +)

3 Electrification of transport Using electric vehicles in city car schemes (NICHES +)

4 Internalization of external costs of transport

Transportation Management Associations (NICHES)Local taxes or charges – road charging(NICHES)

5 Reduced use of own car transport in favour of public transit and car sharing

Urban lift services (NICHES)Public bicycles (NICHES)Call-a-bus services (NICHES)Travel training for public transport (NICHES +)Innovative cycling facilities (NICHES +)Infrastructure for innovative bus systems (NICHES +)Tailored traveler information for users with reduced mobility (NICHES +)Infrastructure for innovative bus systems (NICHES +)Neighborhood accessibility planning (NICHES +)Group Rapid Transit (GRT) and Personal Rapid Transit (PRT) (NICHES+)

6 Increasing transport efficiencyReduction in administrative inputs to transport (E-Freight)

Space management for Urban Delivery (NICHES)Inner-city night delivery (NICHES)Alternative solutions for home delivery (NICHES)Financing and implementing traffic management centres (NICHES +)Mobile information services for public (NICHES +)

Transport policy scenarios EU policy under action plan

1&2 (Fuel) efficiency Driving education for more efficiency (Action 9)Low and zero emission vehicles (Action 10)Internet guide on clean vehicles (Action 11)

3 Electrification of transport Low and zero emission vehicles (Action 10)Support for STEER project (Action 14)

4 Internalization of external costs of transport

Internalization of external costs in urban systems (Action 12)Support of urban pricing schemes (Action 13)

5 Reduced use of own car transport in favour of public transit and car sharing

Passenger rights (Action 4)Accessibility of transport for persons with reduced mobility (Action 5)Behavior for sustainable transport use (Action 8)

6 Increasing transport efficiencyReduction in administrative inputs to transport (E-Freight)

Improving travel information (Action 6)Urban freight transport (Action 19)Intelligent transport systems for urban mobility (Action 20)

Urban policy

• Case of London, Milan and Copenhagen • Not-unique, but indicatory for ‘sustainable’ urban policy• Comparable strategies – divergent ‘historical track record’

– Economic centers– Particular problems for particular location – strategies to mitigate– Plenty of information available– Well-known examples for ‘innovative’ transport policy

• Strategies:– Milan: Pricing – LEZ – Investments in public transport– Londen: Pricing – Technology – Investments in public transport– Copenhagen: Urban planning – Cycling (1/3) / Road (1/3) / Public (1/3)

04/22/23 12

Main policies

Urban planning– Implementation of a ‘controlled’ urban extension plan (Copenhagen)

in a very early stage of planning, did not stop urban sprawl, but directed it towards certain well connected regions.

– Limitations: ‘Ørestad’ extension as the 6th finger (Majoor S.J.H, 2008)-Lower demand for land (-15%) & -Property tax income (-60%) -Higher cost (+66%)-Conflicts between authorities -Additional financing-Switch from ‘out-of-center’ office space to housing.

04/22/23 13

Road charging / LEZ– Not many cities have implemented a road charging system in the way it is

theoretically intended, namely: ‘a kilometre and time-dependent road charge to optimise the use of the capacity and reduce external congestion costs.

– In the cities where road charging or a similar type of charges were introduced (London, Milan, Stockholm), public acceptance grew substantially after introduction.

– The impact of a road charge is largest when the charge is first introduced (-20 % / -30% in traffic)

– The impact on longer term is often lower, as people tend the change their travel behaviour and/or location or exploit certain exemptions built into the scheme.

– In fact, this makes clear that road charging is only one of the tools a city can use to improve the urban traffic flow and that its set-up should be considered carefully.

04/22/23 14

London (LCCS)•Only small area of the city•Large discounts to residents of the central area (-90%) and other exemptions•Little difference in timing, location and trip distance (not kilometre dependent)•High operational cost and implementation costs (£200 million)•The limited area it extends to (central city alone)-> Introduction (weakening of congestion charge) to a LEZ for Greater London

EcoPass / Area C (Milan)•Ecopass = charge for ‘polluting’ vehicles in the center of Milan since 2010•Short term: reduction in PM with -20% and traffic with 21%•After 2 years: traffic levels return to pre-introduction phase (older vehicles out-of-stock)•Area C: introduced in 2012 as sequel for EcoPass. •€5 for each vehicle entering the zone + 40 free entrances for residents

04/22/23 15

04/22/23 16

Public transport •Each of the cities discussed relies heavily on subway, tram and bus networks to move passengers across the city. •Improvements in ticketing, such as standard tickets across all intra-city transport and ‘fast-passes’ such the Oyster pass, can reduce waiting times substantially and make public transport more attractive. •Earmarking the taxes from the road charge, has substantially helped to gain public acceptance for the scheme. •This creates a direct link between the revenues collected from road charges (and thus from congestion) and investments in public roads and public transport.

Promotion of fuel efficient vehicles •Free parking & free recharging for electric vehicles / hybrids •Tax discounts / subsidies on national levelPromotion of cycling & walking•Milan – bike sharing program – only very limited cycling (<1%)•London – promotion of cycling – reaching 1% of trips•Copenhagen – reaching 33% of total trips

04/22/23 17

Transport policy scenarios

Copenhagen London Milan

1&2 Energy and fuel efficiency

Promotion of cyclingPromotion of low carbon solution -> Copenhagen carbon free in 2025

Hybridization of public busses Tax discounts for low polluting vehicles

EcoPass system differential charging for low polluting vehicles,

3 Electrification of transport

EV parking free of charge – 85% of municipal vehicles electric (by 2015)Increase in EV recharging points and parking placesPlans for full scale infrastructure adaptation.

Installation of recharging points – reaching 8% of penetration by 2025No parking charges + other government stimuli towards EV’s

Milan one of first cities in Italy with recharging point for EV’sArea C exempts EV’s and hybrid cars from charges.

4 Internalization of external costs of transport

Drawing up of parking strategyNoise abatementIntroduction of road pricingNew speed limitsRoad charging is being considered.

London congestion charge (LCCS)LEZ zone for Greater LondonInnovative parking charges (time and emission dependent)Access restrictions for freight during night and weekends

Ecopass and its suitor Area C.

5 Reduced use of own car transport in favour of public transit and car sharing

More cycle tracks + more cycle routesEnlarging of the metro + public transport in development areasChange travel habitsImprove bus mobility and safety

Bike sharing programPublic transit education programIntegration of ticket charging system (Oyster)Public transit education

Bike sharing programInvestments in mass transit and redevelopment of areas

6 Increasing efficiency of transport

Differential charging in LEZ scheme

Lower entry charges for commercial vehicles in Area C.CITYPLUS initiative

Job creation effects

04/22/23 18

• Main idea: combine the ‘micro’ and ‘macro’ effects of urban policy• What happens for small moves towards ‘sustainability’, can we

determine the ‘extra’ jobs that are created?• Combination of literature review and model based analysis• Run the EDIP model of D15.2 with a small shock in subsidies /

investments or increase in efficiency• Calculate the small amount of additional employment this generates

Job multipliers

04/22/23 19

Investment / Subsidy Energy Efficiency

Fuel economy Electrification Changing behaviour

Efficiency

REVIEW

21.5 (GHK,2011) 13.09 (PERI, 2009)

3.8 (PERI, 2009) 3.3 (Mc Kinsey, 2010)

No estimate available in monetary cost

1.13 -3.35 (EC, 2013)

30 (TransEcon,2003)

7.7 (Bell C., 2012)

3.5 (CERES, 2011)

11-19 (D14.2) 3 (UCS, 2007)

6.2 /5.6 (Riccardo AEA,2013)

EDIP (own calculations) 9.76 (EU 15) 13.9 (EU 15) 4.37 (EU 15) -0.47 (EU 15) 1.88 (EU 15) 6.53 (EU 15)

36 (EU 12) 48.69 (EU 12) 3.23 (EU 12) -0.71 (EU 12) 6.21 (EU 12) 27.56 (EU 12)

GDP multipliers

04/22/23 20

Investment / Subsidy

Energy Efficiency

Fuel economy Electrification Changing behaviour

Efficiency

REVIEW

2 (Leduc et al, 2012)

No estimate available

0.12-0.28 (Riccardo AEA, 2013)

No estimate available

No estimate available

0.2-0.35 (EC, 2013)

1.8 (TCRP, 2009)

2-28 (Broyer et al, 2012)

EDIP (own calculations)

0.34 (group 1) 2.12 (group 1) -0.15 (group 1) -0.02 (group 1) -0.05 (group 1) 1.18 (group 1)

0.36 (group 2) 1.93 (group 2) -0.18 (group 2) -0.06 (group 2) -0.03 (group 2) 1.22 (group 2)

Winners & losers in electrification

04/22/23 21

Large inter-country differences

04/22/23 22

Impact of 1% electrification

04/22/23 23

Impact of shock in efficiency

04/22/23 24

Depends on share employment in transport

04/22/23 25

Impacts of urban policy• Compare different policies with each other on the basis of the

theory, literature review, case-study and modelling• Implicit link with the global scenarios of D15.2• Energy efficiency = strongest policy in terms of combining job

creation effects & sustainability• Fuel efficiency / electrification: negative impact on congestion• Transport policies: promoting cycling is probably the policy

with the lowest cost and the highest impact• Parking policy can be second-best for a road charging system,

technological progress allows for:– Dynamic pricing according to hour of arrival and departure– Different charges for fuel-efficient or electric vehicles

04/22/23 26

04/22/23 27

04/22/23 28

Conclusions• Very diverse work – combination of different methods• Link between global scenarios and the micro-scenarios ->

socio-ecological transition will be strongest at the level of the city

• Road charging / road tolling very powerful policy to redirect traffic flows, but politically difficult to defend

• Second-best parking policy may be used as a proxy• Effectiveness of cycling policy• Urban planning effective for long term city planning, when

driven by ‘demand’• Restrictions for urban freight / urban delivery center have

questionable results

04/22/23 29

Thank you!

Any questions?

04/22/23 30