Affordability and subsidies in public urban transport : what do we mean, what can be done?

Subsidy policies on public urban transport have been adopted ubiquitously. In both developed and developing countries, subsidies are implemented to make transport more affordable. Despite their widespread implementation, there are virtually no quantitative assessments of their distributional incidence, making it impossible to determine if these instruments are pro-poor. This paper reviews the arguments used to justify subsidy policies in public urban transport. Using different tools to quantitatively evaluate the incidence and distributive impacts of subsidy policy options, the paper analyzes the findings of a series of researchpapers that study urban public transport subsidy policies in developed and developing countries. The available evidence indicates that current public urban transport subsidy policies do not make the poorest better off. Supply-side subsidies are, for the most part, neutral or regressive; while demand-side subsidies perform better-although many of them do not improve income distribution. Considering that the policy objective is to improve the welfare of the poorest, it is imperative to move away from supply-side subsidies towards demand-side subsidies and to integrate transport social concerns into wider poverty alleviation efforts, which include the possibility of channeling subsidies through monetary transfer systems or through other transfer instruments (food subsidies, health services and education for the poor). The general conclusion of the paper is that more effort should be devoted to improve the targeting properties of public urban transport subsidies using means-testing procedures to ensure a more pro-poor incidence of subsidies.Transport Economics Policy&Planning,Transport in Urban Areas,Urban Transport,Taxation&Subsidies,Economic Theory&Research

Walking accessibility to bus rapid transit: Does it affect property values? The case of Bogotá, Colombia

This research sheds light on the relation of bus rapid transit and residential property values within walking distance to the system. The case study was Bogotá\u27s Transmilenio (Colombia). This research conducted a city-wide econometric hedonic analysis with 2000 to 2004 Department of Housing Control data across different walking distances, subsystems (trunk, feeder), socio-economic strata and time. The main results showed that, with respect to the value of properties in relation to proximity, the housing market places value premiums on the properties in the immediate walking proximity of feeder lines. The analysis by socio-economic strata showed that middle-income properties were valued more if they fell closer to the system, while there were opposite results for low-income housing. Finally, analysis across time reflects slight average annual increases in property values correlated with the implementation of the system in two specific areas analyzed. Throughout the paper, the author acknowledges some of the challenges of using hedonic modeling for property value impact assessments and emphasizes that the interpretation of the results are case specific

Affordability and Subsidies in Public Urban Transport: What Do We Mean, What Can Be Done?

Subsidy policies on public urban transport have been adopted ubiquitously. Both in developed and developing countries, subsidies are implemented under two major premises: (1) to increase public transport use and to reduce externalities, such as greenhouse gas emissions and congestion, and (2) to make transport more affordable, particularly for the poorest. This paper focuses on the latter. Despite the widespread implementation of subsidies, there are virtually no quantitative assessments of their distributional incidence, making it impossible to determine if these policy instruments are pro-poor. Using different tools to quantitatively evaluate the incidence and distributive impacts of subsidy policy options, this paper analyses the findings of a series of research papers that have studied urban public transport subsidy policies in developed and developing countries. Available evidence indicates that current public urban transport subsidy policies do not make the poorest better off. Supply side subsidies—provided to the operator—are, for the most part, neutral or regressive; while demand side subsidies—provided to the user—perform better, although many of them do not improve income distribution. Considering that the vast majority of developing countries justify public urban transport subsidies on social grounds, as a means to improve the mobility, and thus welfare, of the poorest, it is imperative to move away from supply side subsidies towards demand side subsidies and integrate transport social concerns into wider poverty alleviation efforts, which include the possibility of channelling subsidies through monetary transfer systems or through other welfare instruments (food subsidies, health services and education for the poor)

Public Transport Funding Policy in Madrid: Is There Room for Improvement?

Public transport policy in the Madrid Metropolitan Area is often deemed as a success. In 1985, an important reform was carried out in order to create a new administrative authority to coordinate all public transport modes and establish a single fare for all of them. This reform prompted a huge growth in public transport usage, even though it reduced the funding coverage ratio of the transport system. Since then, Madrid\u27s public transport system has been undergoing an increasing level of subsidization, which might jeopardize the financial viability of the city public transport system in the future. In this paper, we present a detailed analysis of the evolution of the public transport funding policy in Madrid in recent years. We found that the increasing level of subsidy can hardly be explained on the basis of equity issues. Moreover, we claim that there is still room for a funding policy that makes the efficiency of the system compatible with its financial sustainability