Project FATIMA Final Report: Part 1.

EXECUTIVE SUMMARY This Final Report covers the results of the EU-funded research project FATIMA (Financial Assistance for Transport Integration in Metropolitan Areas) which had the following objectives: (i) to identify the benefits to the private sector of optimal urban transport strategies, and the potential for obtaining private sector funding to reflect those benefits; (ii) to determine the differences between strategies optimised using public funds and those optimised within the constraints imposed by private funding initiatives; (iii) to propose mechanisms by which private sector funding can be provided so as to achieve appropriately optimal transport strategies while maintaining quality of operation; and (iv) to use the results to provide more general guidance on the role of private sector funding for urban transport in the EU. The project adopted an approach which involved the application of the same study method to nine cities, chosen to reflect a range of urban transport policy contexts in Europe: Edinburgh, Eisenstadt, Helsinki, Merseyside, Oslo, Salerno, Torino, Tromsø and Vienna. This method involved specifying appropriate policy objective functions against which transport strategies could be assessed, and finding the specific strategy that optimised each of these functions. The objective functions covered a range of differing regimes with respect to constraints on public finance and the involvement of the private sector. It was found that, in a majority of the case study cities, optimal socio-economic policies could be funded by road pricing or increased parking charges, considered over a 30 year time horizon. Such measures would typically be used to make it feasible to increase public transport frequency levels or decrease public transport fares. In general it was found to be important that the city transport planning authority had complete control over all transport measures, affecting both private and public transport. However, such strategies are likely to require significant levels of investment and, given current attitudes towards constraints on public spending, it might be politically awkward for the public sector to raise such finance. There is thus a potentially useful role for private finance to be used to help overcome such (short term) financing problems. However, it must be appreciated that the private sector will expect to make a profit on such investment. In cities where optimal policies are funded by travellers, the private sector can be reimbursed by travellers. In cities where it is unfeasible for travellers to fund all the costs of optimal policies, it will be necessary for the private sector to be reimbursed from public funds (raised from taxes). An important issue here is that the use of private finance should not be allowed to replace optimal policies with sub-optimal policies. Whether or not the private sector is involved in financing a strategy, there may be interest in private sector operation of the public transport service. However, evidence on the scale of benefits or losses from such operation is unclear. If, though, a city authority decides that private operation is beneficial, it should use, where legally possible, a franchising model in which it specifies optimal public transport service levels and fares. On the other hand, if a deregulation model is required (in order to comply with national law), private operators should not be given complete freedom to determine the operating conditions which meet their profitability target, even if the level of profitability is itself constrained as a result. There are typically a number of combinations (e.g. of fares and frequency) which achieve a given level of profitability, and not all will be equally effective in terms of public policy objectives

Optimal fares and capacity decisions for crowded public transport systems

International audienceThere is a large operations research literature on public transit system design. An extensive economic literature has also developed on public transit capacity investments, service frequency, and optimal pricing and subsidy policy. These two branches of literature have made significant advances in understanding public transit systems. However, in contrast to the literature on automobile traffic congestion, most of the studies have employed static models that cannot account for travelers' time-of-use decisions and the dynamics of transit congestion and crowding. The time profile of ridership is driven by the trade-off that users face between traveling at peak times and suffering crowding, and avoiding the peak by traveling earlier or later than they would like. A few studies have explored this trade-off using simple microeconomic models that combine trip-scheduling preferences as introduced by Vickrey (1969) with a crowding cost function that describes how utility from travel decreases with passenger loads. In this paper we use this modeling framework to analyze usage of a rail transit line, and assess the potential benefits from internalizing crowding externalities by setting differential train fares. We also present results on optimal train capacity and the number of trains put into service

Designing optimal urban transport strategies : the role of individual policy instruments and the impact of financial constraints

This paper presents a methodology for the design of optimal transport strategies and the case study results of the methodology for the City of Edinburgh, using the two multi-modal transport/land-use models MARS and TPM. First, a range of policy instruments are optimised in turn and their relative impacts explored. Second, optimisations with and without financial constraints are performed and compared. Although both models produce similar optimal policies, the relative contribution of the instruments differs between models as does the impact on outcome indicators. It is also shown that by careful design it is possible to identify a strategy which costs no more than the do-minimum but which can generate substantial additional benefits. The optimisation methodology is found to be robust, and is able to be used with different transport models, and with and without financial constraints

PROJECT OPTIMA: optimisation of policies for transport integration in metropolitan areas

The overall objectives of Project OPTIMA were: (i) to identify optimal urban transport and land use strategies for a range of urban areas within the EU; (ii) to compare the strategies which are specified as optimal in different cities, and to assess the reasons for these differences; (iii) to assess the acceptability and feasibility of implementation of these strategies both in nine case study cities (Edinburgh, Merseyside, Vienna, Eisenstadt, Tromsø, Oslo, Helsinki, Torino and Salerno) and more widely in the EU; and (iv) to use the results to provide more general guidance on urban transport policy within the EU

Project FATIMA Final Report: Part 2

The final report of project FATIMA is presented in two parts. Part 1 contains a summary of the FATIMA method and sets out the key recommendations in terms of policies and optimisation methodology from both project OPTIMA and project FATIMA. Part 1 is thus directed particularly towards policy makers. Part 2 contains the details of the methodology, including the formulation of the objective functions, the optimisation process, the resulting optimal strategies under the various objective function regimes and a summary of the feasibility and acceptability of the optimal strategies based on consultations with the city authorities. This part is thus mainly aimed at the professional in transport planning and modelling

Optimisation of policies for transport integration in metropolitan areas: report on work packages 30 and 40

The overall objectives of Project OPTIMA are:- (i) to identify optimal urban transport strategies for a range of urban areas within the EU; (ii) to compare the strategies which are specified as optimal in different cities, and to assess the reasons for these differences; (iii) to assess the acceptability and feasibility of implementation of these strategies both in the case study cities and more widely in the EU, and (iv) to use the results to provide more general guidance on urban transport policy within the EU. There is a wide range of objectives of transport policy in urban areas, but most can be grouped under the broad headings of economic efficiency, including economic development, on the one hand, and sustainability, including environment, safety, equity and quality of life, on the other. It is now generally accepted that the overall strategy for achieving these objectives must include an element of reduction of private car use and transfer of travel to other modes. The policy instruments for achieving these objectives can include infrastructure provision, management measures to enhance other modes and to restrict car use, and pricing measures to make public transport more attractive and to increase the marginal cost of car use. It is now widely accepted that the most appropriate strategy will involve several of these measures, combined in an integrated way which emphasises the synergy between them. The most appropriate strategy for a city will depend on its size, the current built form, topography, transport infrastructure and patterns of use; levels of car ownership, congestion and projected growth in travel; transport policy instruments already in use; and the acceptability of other measures in political and legislative terms. These will differ from city to city. Policy advice cannot therefore be generalised, but must be developed for a range of different types of city. This is the approach adopted in this study, in which nine different cities in five countries (Edinburgh, Merseyside, Vienna, Eisenstadt, Trams@, Oslo, Helsinki, Torino and Salerno) have been studied in detail, using a common study methodology. This report summarises the output of two work packages in OPTIMA: WP30: Test Combinations of Policy Instruments WP40: Identify Optim

Towards marginal cost pricing: A comparison of alternative pricing systems

European urban areas are marred by the problems of congestion and environmental degradation due to the prevailing levels of car use. Strong arguments have thus been put forward in support of a policy based on marginal cost pricing (European Commission 1996). Such policy measures – which would force private consumers to pay for a public service that was previously provided «for free» – are, however, notoriously unpopular with the general public and hence also with their elected representatives – the politicians. There is thus an obvious tension between economic theory, which suggests that marginal cost pricing is the welfare maximising solution to urban transport problems, and practical experience, which suggests that such pricing measures are unwanted by the affected population and hence hard to implement through democratic processes. The AFFORD Project for the European Commission has aimed to investigate this paradox and its possible solutions, through a combination of economic analysis, predictive modelling, attitudinal surveys, and an assessment of fiscal and financial measures within a number of case study cities in Europe. In this paper the methodology and results obtained for the Edinburgh case study are reported in detail. The study analyses alternative road pricing instruments and compares their performance against the theoretical first best situation. It discusses the effect of coverage, location, charging mechanism and interaction with other instruments. The paper shows that limited coverage in one mode may lead to a deviation from the user pays principle in other modes, that location is as important as charge levels and that assumptions about the use of revenues are critical in determining the effect on equity and acceptability. Finally the results show that a relatively simple smart card system can come close to providing the economic first best solution, but that this result should be viewed in the context of the model assumptions

Deregulating the Bus Industry.

In its Buses White Paper, the British Government sets out its proposals for abandoning quantitative control of entry to and provision of local bus services. The logic on which the proposals are based can be reduced to four propositions:- (i) Deregulation will produce a competitive market. (ii) Competition will substantially reduce costs. (iii) A competitive market will improve resource allocation. (iv) A competitive market will not cause any significant undesirable spin-off effects. Each of these propositions is suspect. If there is any competition on bus routes, it will tend to be small group rather than large group. Active rivalry involving schedule matching and price wars may occur, as may collusion. Neither will produce efficient results. Even if a competitive result were to obtain, the resulting resource allocation would not be socially efficient. A first best optimum requires subsidies because the market is subject to external economies (the Mohring effect). If Government budget constraints operate, the second-best solution then requires cross-subsidies. Competition is not compatible with social efficiency in either of these cases. Nor will the competitive market solution optimise load factors. Quality competition, in the form of minibuses 'creaming' the best traffics, may also be socially undesirable. The White Paper authors underplay the significance of these resource allocation arguments, while exaggerating the likely impact of deregulation on cost efficiency. Even though some cost savings may be available they could be obtained anyway under a regime of competitive tendering for profitable as well as unprofitable routes. Competition for the market rather than competition in the market is required

Urban Transport Market Theoretical Analysis.

1.The Institute for Transport Studies (ITS) was commissioned by the Department of Transport (DoT), the Association of Metropolitan Authorities (AMA) and the Passenger Transport Executive Group (PTEG) to undertake this project in November 1992. 2.The objectives of this study were: (a)to establish a simple economic model of urban transport operations, based on present policies; (b)to estimate, using the model, the theoretically optimal form of intervention in urban rail under the present policy constraints, and differences between this optimum and current procedures; (c)to investigate how improved procedures might be implemented in practice in the light of the kind of data which are currently available or become available in the course of a Section 56 appraisal and to make suggestions for additional data collection

Regulation in the Taxi Industry.

This paper examines some of the economic reasons for price and entry regulation in the taxi industry and presents the legal framework under which taxis and hire cars are regulated in England and Wales outside London. It is argued that the current law is defective and should be amended to incorporate explicitly the inter-relationship between fares and vehicle numbers such that the regulators have the discretion to choose between a high price/high availability service and a low price/low availability service