Transportation Economics

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Wed, Feb 27, 2008, 2:10 pm  //  Craig Mayberry

It looks like another legislative session and another missed opportunity to deal with transportation problems in the state, especially around Seattle. Both political parties seem to ignore some of the fundamental economics at play. If you own a business and have seen a steady increase in customers until your factory no longer has capacity to build enough products, you have two choices. First, you can build another factory. Second, you can invest in efficiencies to improve the output of the current factory. Building a new factory comes with a substantial increase in capital costs and ongoing costs. Improving existing capacity also comes with a cost, but usually a fraction of the cost of building a new factory. Businesses usually jump to the second option and try to improve efficiency, before deciding to build a new factory. Why would our state government not take the same approach, instead of immediately jumping to the most expensive option?

The economics of roads are like the economics of factories. We have seen a steady increase in the use of roads to where our current roads cannot meet demand, the result being traffic gridlock. We have two choices. First, build new roads (or widen existing roads). Second, improve the efficiency of our existing roads through a better mass transit system (buses). It should be noted that light rail is the worst of both worlds due to the high construction cost and lower ridership. Buses move far more people in the same space as a few cars, and have the same flexibility of the current road system. A good bus system is the equivalent of an improvement in efficiency in a factory. Either option is going to cost money. New riders will not pay for the entire cost of an improved bus system, but then again neither will drivers pay for a new road. Just like the factory example above, we have a choice of building new roads at a few billion dollars per project, or we can spend a few hundred million dollars improving the bus system, and not build as many new roads. The cost of building new roads is now astronomical and cannot be done within current state economics, which is why each legislative session we come out with no real answers.

Many will claim that we are not willing to subsidize bus transportation, yet the fundamental question is whether we would rather spend $5 billion a year of our taxes on new roads, or $700 million a year of our taxes on a better bus system that improves convenience and reduces the number of cars on the road. If the bus systems were structured such that 10-20% of commuters could realistically use the bus, then that would free up that much space on our existing roads. Either way, the taxpayers will be on the hook for the bill, but it would be better to be on the hook for a few hundred million than a few billion. Bus ridership is based on availability and convenience, neither of which we have obtained to high enough levels that buses are a viable transportation alternative. I have heard many say that buses are not viable until gas is over $4.00 a gallon, but it is not that simple. Bus ridership is based on convenience, the more convenient the more likely someone is willing to ride even with cheaper gas prices. With our current inconvenient bus system, then even at $4.00 a gallon for gas it is unlikely to make a dent in bus ridership. There is no doubt that there is tremendous pressure on our state government to focus on road construction, versus cheaper alternatives, but economics will ultimately prevail.

Coming soon… A Tale of Two Cities

Tip Johnson  //  Wed, Feb 27, 2008, 3:30 pm

It seems necessary to continue repeating this:

There are more registered vehicles than people in our metropolitan areas.  Each vehicle is estimated to cost between $4,000 and $7,000 per year to keep running.  Therefore, we can multiply our population times a conservative $5,000 per year to estimate our direct out-of-pocket expense for private transportation.  So a population of 100,000 is spending at least $500,000,000 a year to drive around in congested traffic in the riskiest transportation system ever devised.  That’s irrational.

Besides smoking, there is nothing we choose to do that is more dangerous than driving cars.  The $500 million does not include our tax contribution toward roads, traffic enforcement and the cost of adjudicating infractions. It does not include the cost of deaths and injuries, or the ecological and health consequences.  It does not account for the alternative cost of committing between 20 and 50 percent of our urban land areas to automobiles.  Overall, it is estimated that we spend almost a third of our personal income on personal transportation.

As far as factories go, no good business would ever invest in a factory with the express intent of letting it sit idle 90% of the time.  Yet that is exactly what we do with our cars - the single biggest investment most Americans will make in their lifetimes.

There are compelling reasons to find alternatives.  First, we already know we can’t fix the problem by building more roads.  If 30% of our dough isn’t doing it, just how much do individuals want to contribute? Plus, our population is growing older.  Very soon a vast majority of us will be ill-equipped to compete with aggressive young drivers on over congested roads - and no one will want them to try!  Are older Americans destined to live shut-in lives, exiled from the economy?  We probably don’t want that, either.  Then there is the environmental aspect. Do we really want salmon in our streams?  What about the consequences of global warming?  And there is an important economic piece.  If we could do the job for 10 or 15 percent of our personal income, we’d have a lot more cash in our local economy that could create jobs and sustain our families.

Are there alternatives?  Light rail does make sense in some circumstances.  Getting around n New York, Singapore, Paris, or many European urban centers is fast, easy and affordable precisely because they chose to invest in fixed guideways before committing to roadway capacity.  Buses are also proven effective, but one hour waits are known to discourage ridership.  Any system requires adequate investment, but our singular comittment to the present system limits our resources for funding alternatives.

There are plenty of other alternatives. Personal Rapid Transit is a light guideway system that has been a theoretically superior people moving option for over twenty years. But it hasn’t been able to break through the many barriers to change.

For that matter, about $20 million a year would pay 200 people $50,000 a year and finance their vans and insurance to drive around Whatcom County, continuously picking folks up and dropping them off wherever and whenever they wanted to go.

Rising fuel prices and diminishing supplies, the cost of reinvesting in alternate fuels and compatible vehicles, the astronomical expense of providing adequate roadway capacity all point to the need for some serious revisions to our transportation infrastructure before the present system grinds to a halt.

It’s a matter of political will, and that has to start with our personal choices.  As long as we choose to do nothing, the outcome is destined to be more of the same.

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