What if we regulated car use?

Enlighten • Pulse #7 • 9 MIN
By Valérie Lachenaud By Yves Crozet Transport economist

The decline in ridership and loss of revenues due to the coronavirus crisis have dealt a blow to public transport networks. According to transport economist Yves Crozet, this new threat accentuates the need to rethink funding and regulation models for urban and suburban mobility solutions.

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How can we make transport accessible to everyone?

3 min
Interview

Yves Crozet, économiste des transports.

What impact has the health crisis had on public transport?

The first and second lockdowns in France resulted in a sharp, long-lasting decline in public transport ridership, which has picked up slightly since but still hasn’t returned to 2019 levels. The reasons behind this decline include the uptick in home working and the economic slowdown, as well as a switch to other modes of transport, such as walking and cycling, but also private cars.

Has the same trend been observed in other countries?

Absolutely. Researchers at ETH Zurich have been following a sample group of passengers and their daily movements for over a year. The data collected clearly shows a decline in passenger traffic during lockdown periods but also a shift in mode choice. Cycling has been one of the most popular modes during the pandemic, at least until autumn, when temperatures started to drop. Road traffic fairly quickly returned to the same level as the previous year, while public transport ridership remains 20% to 30% lower than pre-lockdown levels. Similar trends have been observed around the world, including in the United States and other parts of Europe.

Isn’t there a risk that the pandemic will undermine efforts made in recent years to develop public transport and reduce car use?

There certainly is. The decline in ridership and commercial revenues is going to create serious problems for transport authorities. In France, transport authority association GART estimated back in May 2020 that nearly €4 billion in financing was needed as a result of the decline in commercial revenues and mobility tax proceeds. Another trend has been accentuated by the pandemic. The desire among certain city dwellers to live in a different environment was heightened by their experience during lockdown, as illustrated by the demand for real estate in suburban areas or even farther afield. If it becomes a reality, this urban “thinning” would diminish the relevance of public transport and increase car use.

How might that affect public transport funding models?

In terms of funding, France is different to other countries because of its mobility tax system: companies with more than 11 employees pay a percentage of their payroll to help finance the public transport network. Introduced nearly 40 years ago by France’s LOTI law on inland transport, this system has ensured a steady stream of resources for many years and enabled significant improvements in the public transport offer. But the economic situation is now calling this system into question. Businesses closures and lay-offs are reducing this source of funding, which often represents more than 50% of operating revenues, or nearly twice as much as commercial revenues.
In other countries, commercial revenues play a larger role and cover at least half of the public transport network’s operating costs. But with ridership declining, that model is also under threat. With the challenging economic environment making it difficult to increase ticket and subscription prices, countries around the world must rethink their funding models.

What are the potential solutions and which ones would you recommend?

Although it’s counterintuitive, the current crisis will probably speed up France’s shift to free public transport. Fifty years ago, commercial revenues accounted for 70% of the public transport network’s total revenues. Today, they represent just 30% on average and 15%-20%, or even less, in many small towns. If revenues decline, the percentage will become insignificant.
In these circumstances, more and more cities will wonder whether it’s worth having ticket machines, turnstiles and ticket inspectors. And they may well be tempted to make public transport free. Niort and Dunkirk already have. Montpellier introduced free public transport on weekends for residents last September. And Audrey Pulvar (an elected official at Paris City Hall) is talking about it for the Greater Paris region. It’s seen by many as a way of converting people to public transport.

What’s your opinion of this solution?

It all depends on the scale involved. In a small town, where public transport costs relatively little and accounts for only a very small share of all travel, it’s easier but it doesn’t change the modal mix. However, in a large city like Montpellier, it jeopardises future investments, including those designed to extend the network outside the city centre. SYTRAL, the public transport authority in Lyon, was able to extend the city’s metro lines and create new tram lines over the past two decades precisely because it took the opposite approach. To develop a high-quality transport network, commercial revenues need to account for a significant portion of the budget. Lyon is the exception to the rule in France : in 2019, commercial revenues covered 60% of its operating costs, compared with less than 30% in the Greater Paris region.

Isn’t free public transport nevertheless a good way to get people out of their cars?

No, it doesn’t work. Free public transport may be a good campaign slogan, but any resulting modal shift is negligible. People don’t use public transport because it’s free, but because it offers a fast, regular and reliable service that takes them where they actually need to go. Passengers will use it for more journeys, over shorter distances, rather than walking or cycling. At best, it’s a way to attract people back to the city centre. But it doesn’t change the fact that the vast majority of motorised journeys are made by car. It’s interesting to note that very few cities around the world have adopted this solution, except for Tallinn in Estonia (for residents only) and Luxembourg. Other cities that had introduced free public transport, such as Portland and Atlanta in the United States, have since backtracked.

What new model do you see emerging?

The aspect of the French model we need to hold on to is the principle of an earmarked source of revenue. But basing that source of revenue on a payroll tax is problematic. First of all, there’s the threshold effect. Since the mobility tax is only payable by companies with 11 or more employees, some businesses may avoid growing. There’s also the issue of geographical equity. Large businesses are often located in outlying areas, while the public transport they’re helping to fund is mainly concentrated in city centres. Firms are relieved of their responsibilities and their employees have no choice but to drive to work.

So, where should public transport funding come from?

Funding could come from other types of taxes, like the one on office real restate in Paris to help fund the Grand Paris Express (GPE) network. But the best solution is a fee for using transport infrastructure, particularly roads, which accounts for most travel. In France, for example, from 1982 to 2000, vehicle tax discs provided funds to the local authorities that managed roads but also coach transport. The tax disc was a very progressive levy, paid primarily by owners of “gas-guzzlers”.
In accordance with the European Union’s recommendations, we need to imagine a more elaborate system where payment would depend — for all vehicles, not just trucks — on the number of miles travelled and the type of roads used. A few years from now, all cars will be connected. The digital revolution must facilitate the widespread application of a basic principle: motorised mobility must pay for motorised mobility. And the modes that take up the most public space must compensate by helping to fund public transport networks, which uses less public space. That’s the idea behind the urban toll system used in London, Stockholm, Gothenborg and Oslo, where tolls generate 20% of public transport operating revenues.

Is a toll a good idea from a social perspective? Wouldn’t the cost be more dissuasive for those with fewest resources?

No, because it’s perfectly compatible with a solidarity-based pricing system. The toll can be adapted according to income level, the size of the vehicle or even the amount of pollution it generates. And don’t forget that people with the lowest incomes already use public transport.

Why charge for using the road network?

Because the vast majority of journeys are carried out by road and because public transport authorities have become multimodal mobility authorities. They can no longer focus solely on public transport, which — excluding in the Greater Paris region — accounts for less than 20% and often less than 10% of all journeys. Given that cars still dominate, and in light of urban sprawl will continue to do so for some time, their use must be regulated because they generate costs, notably in terms of road safety, noise, pollution and use of public space. Yet, today, with the exception of certain motorways, road use is free of charge, especially for electric vehicles. Paradoxically, the transition to electric vehicles is going to require the introduction of a distancebased “pay-as-you-go” pricing system.
Legislation has already imposed the user-pays principle for water, waste and electricity, but the question hasn’t even been raised for mobility.

Would it be politically sustainable? The yellow vests movement has shown how sensitive this topic is....

The issue is a tricky one and the “solutions” devised by economists tend to be problematic for public decision-makers. But those same decisionmakers are setting very ambitious environmental objectives: greenhouse gas emissions reduction, zero net artificial land development, preservation of biodiversity, and more. And protecting those community assets requires increased regulation of motorised transport. At the European level, this observation has resulted in a de facto alliance between economists and ecologists, who agree that charging is a good way to change behaviours. Realising that the transition will be difficult is not enough; the groundwork needs to be laid. If transport authorities continue to focus solely on city-centre mobility solutions — whether it’s with gimmicks like free public transport or “low-emission zones” — they will completely miss their target. And the climate commitments made 55% less greenhouse gas emissions by 2030 will not be achieved. To ensure that mobility regulation is aligned with those commitments, ambitious measures must be taken.

What kind of measures?

Introducing charges for all motorised mobility solutions, but also revolutionising the way roads are used. Because better mobility regulation also requires the reorganisation of road space. Solo driving needs to be curtailed by setting aside more space for green modes of transport, including for long distances in suburban areas, but also for collective mobility solutions, such as carpooling and express coaches on motorways.
These measures need to be implemented on the access roads to urban areas in order to avoid the rebound effect that electric vehicles are going to have on the car market by reducing the cost of using a private car. The transition from public transport authority to multimodal mobility authority involves a change of scale that requires the use of new tools.

Yves Crozet

Economist Yves Crozet is an emeritus professor at Sciences Po Lyon and a member of the Transport, Urban Planning and Economics Laboratory (LAET) research unit, which he directed from 1997 to 2007. He also contributes regularly to research by the Brussels-based Centre on Regulation in Europe (CERRE), a European think tank, and by the International Transport Forum at the OECD. His most recent work includes reports on new forms of mobility, Mobility-as-a-Service (Maas) and the role of the cars in urban mobility.

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