Smarter Travel Programmes–Financial impacts for Transport

for London

COLIN BUCHANAN

www.cbuchanan.es

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Structure Introduction Least Cost Planning Applying it to London

Impact of ST programmes Cost Issues ST programme financial impacts

Conclusions

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Introduction Main aim of ST is shifting trips from car to

more sustainable forms of transport: rail, bus, walking and cycling.

Economic benefits of Smarter Travel include: Environmental benefits Highway Congestion Relief Operating Cost savings Health and ambience benefits

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Introduction There are financial implications linked to

mode shift – revenues and costs. In London those fall on TfL

CB asked to look into the financial impacts for TfL of Smarter Travel programmes: School travel plans Workplace travel plans Area based schemes Car clubs Personalised travel planning Travel awareness and marketing

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Introduction

Could Smarter Travel

Reduce operating subsidy?

Reduce or delay capital expenditure? `

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Structure Introduction Least Cost Planning Applying it to London

Impact of ST programmes Cost Issues ST programme financial impacts

Conclusions

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Least Cost Planning Means taking a holistic view of costs and

revenues. Using demand management to eliminate or delay capital investment.

Businesses paying to persuade people to consume less of their product.

Can be soft (providing information on choices) or hard (paying for usage reductions). ST has elements of both.

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What Drives LCP?

Essentially when Marginal Cost > Marginal Revenue – applies mainly to industries where:

There is a constant increase in demand Costs are driven by peak usage High cost of capital investment

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Average & Marginal costs

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LCP and TfL?Applying LCP to TfL:

operating costs > revenues (eg London Buses) demand growth triggers need for capital

investment (eg peak period rail demand)

In both cases lower demand could lead to a financial gain/saving.

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LCP measures Information/marketing Financial incentives/subsidies Targeting measures at specific problems

(e.g: when and where demand is highest) Improve supply efficiency instead of new

infrastructure Promote efficiency by the end-user

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LCP Conclusions Spending £ to reduce demand is a perfectly

reasonable response, especially within networked industries.

Transport is not a “good” it’s a derived demand. More transport is not necessarily a good thing.

BUT transport does have important social, environmental and economic implications. Cost/subsidy minimisation not an optimal policy

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Structure Introduction Least Cost Planning Applying it to London

Impact of ST programmes Cost Issues ST programme financial impacts

Conclusions

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Impacts of ST programmes - method Looked at ST programmes and what their

impacts on mode shift had been

Data sources: i-trace, other TfL/DfT reports and projects and CB experience

Assumptions made on differential impacts by time period ( peak and offpeak) and location (Inner and Outer London)

More data needed!

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Annual impacts of ST programmes in trips (per £X spend)

* For STP, costs include wider infrastructure investmentTrips per annum

Workplace travel plans

School travel plans*

Personalised travel plans

Car clubs

Marketing and travelawareness

Area-based schemes

TLRN car rail bus cycle walk other car

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ST Programmes - Conclusions All focus on reducing car use. WTP most effective at that and

STP the least (half budget on engineering measures).

WTP/PTP generally transfer most people to rail/bus

Area-based schemes, STP, marketing and travel awareness have highest mode shift towards walking & cycling

Mode shift varies significantly by location and time of day

Analysis assumes (a) no change in total trip numbers – OK for STP but probably overestimates shift to other modes for other programmes(b) average distances per trip on all modes

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Structure Introduction Least Cost Planning Applying it to London

Impact of ST programmes Cost Issues ST programme financial impacts

Conclusions

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Cost Issues AC = TC/Demand MC = ∆TC/∆D

Marginal costs are most relevant to this study we want the financial impact of a change in demand

In general MC(bus) is close to AC(bus) whereas MC(rail) is very low until capital investment reqd.

Both average and marginal costs need to include the costs of capital investment

Revenues assumed to be constant (MR=AR) although vary by mode

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Costs & Revenues in LondonKey conclusions: Buses rarely cover full costs through

revenues – scope for some additional demand in off peak

Rail financial performance improved by new users until further capital spend required

Peak period, peak direction demand growth may be financially negative

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Structure Introduction Least Cost Planning Applying it to London

Impact of ST programmes Marginal Costs by mode ST programme financial impacts

Conclusions

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Financial ImpactsPurely based on the cost/revenue analysis:

WTP could be financially viable investment, quite apart from economic benefits from congestion relief

STP negative financial impacts because children do not pay bus fares. Extra costs & no revenues

Other programmes recoup between 20% and 80% of their costs in financial gains for TfL

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Structure Introduction Least Cost Planning Applying it to London

Impact of ST programmes Marginal Costs by mode ST programme financial impacts

Conclusions

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Financial conclusions Most gains in Outer London/off peak where

shift from car to rail & bus is financial gain because of spare capacity

In the peaks best to concentrate on shift to walk/cycle

Financial impacts vary widely by mode, time period and location. General conclusions will vary widely in particular case studies

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Conclusions1. ST programmes clearly generate significant

financial returns for TfL – these should be included in the economic case for ST

2. Financial returns vary widely between programmes and locations – but are significant

3. Returns are based on existing ST programmes focussed on reducing car use. Could be much higher if overall focus changed to shifting to walk/cycle

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Implications Targeting ST programmes on specific

issues could dramatically improve financial and economic case

Local ST programmes could reclaim some funds from bus/rail operators?

ST could focus on switching users to walk/cycle to avoid the need for additional buses?

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Thank You

Paul BuchananPaul.buchanan@cbuchanan.co.uk

Buchanan Consultoreswww.cbuchanan.esT 91 781 8293 M 607 94 17 33