Editing Transport economics

{{Short description|Branch of economics}}
{{Use dmy dates|date=May 2018}}
{{More citations needed|date=May 2007}}
[[File:09541jfGuadalupe Cloverleaf Interchange J P Rizal Cembo Station Mandaluyong Makati Cityfvf 06.jpg|thumb|right|200px|This picture illustrates a variety of transportation systems: public transportation; private vehicle road use; and rail]]
'''Transport economics''' is a branch of economics founded in 1959 by American economist [[John R. Meyer]] that deals with the [[resource allocation|allocation of resources]] within the transport sector.<ref>{{cite journal |last1=Hörcher |first1=Daniel |last2=Tirachini |first2=Alejandro |title=A review of public transport economics |journal=Economics of Transportation |date=2021 |volume=25 |pages=100196 |doi=10.1016/j.ecotra.2021.100196 |doi-access=free|hdl=10044/1/88249 |hdl-access=free }}</ref> It has strong links to civil engineering. Transport economics differs from some other branches of economics in that the assumption of a spaceless, instantaneous economy does not hold. People and goods flow over networks at certain speeds. Demands peak.  Advance ticket purchase is often induced by lower fares. The networks themselves may or may not be competitive. A single trip (the final good, in the consumer's eyes) may require the bundling of services provided by several firms, agencies and modes.<ref>{{Cite web |url=http://www.civilengineerbuddy.com/transportation-economics-an-introduction-transportation-engineering/ |title=Archived copy |access-date=6 April 2018 |archive-date=14 July 2018 |archive-url=https://web.archive.org/web/20180714170405/http://www.civilengineerbuddy.com/transportation-economics-an-introduction-transportation-engineering/ |url-status=dead }}</ref>

Although transport systems follow the same [[supply and demand]] theory as other industries, the complications of [[network effect]]s and choices between dissimilar goods (e.g. car and bus travel) make estimating the demand for transportation facilities difficult. The development of models to estimate the likely choices between the goods involved in transport decisions ([[discrete choice]] models) led to the development of an important branch of [[econometrics]], as well as a Nobel Prize for [[Daniel McFadden]].

In transport, [[Demand (economics)|demand]] can be measured in number of journeys made or in total distance traveled across all journeys (e.g. [[passenger-kilometer]]s for public transport or vehicle-kilometers of travel (VKT) for [[private transport]]). [[Supply (economics)|Supply]] is considered to be a measure of capacity. The price of the good (travel) is measured using the [[generalised cost]] of travel, which includes both money and time expenditure.

The effect of increases in supply (i.e. capacity) are of particular interest in transport economics (see [[induced demand]]), as the potential environmental consequences are significant (see ''externalities'' below).

== Externalities ==
In addition to providing benefits to their users, transport networks impose both [[positive externalities|positive]] and [[negative externalities]] on non-users. The consideration of these externalities – particularly the negative ones – is a part of transport economics.

Positive externalities of transport networks may include the ability to provide [[emergency services]], increases in land value, and [[economies of agglomeration|agglomeration benefits]]. Negative externalities are wide-ranging and may include local air pollution, [[noise pollution]], [[light pollution]], [[traffic safety|safety hazards]], [[:wikt:severance|community severance]] and [[traffic congestion|congestion]]. The contribution of transport systems to potentially hazardous [[climate change]] is a significant negative externality which is difficult to evaluate quantitatively, making it difficult (but not impossible) to include in transport economics-based research and analysis.

Congestion is considered a negative [[externality]] by economists.<ref>{{Cite book | last1 = Small | first1 = Kenneth A. | last2 = José A. Gomez-Ibañez | year = 1998 | title = Road Pricing for Congestion Management: The Transition from Theory to Policy| publisher = The University of California Transportation Center, University of California at Berkeley| pages = 213 }}</ref> An externality occurs when a transaction causes costs or benefits to third party, often, although not necessarily, from the use of a [[Public good (economics)|public good]]. For example, manufacturing or transportation cause air pollution imposing costs on others when making use of public air.

=== Traffic congestion ===
{{main|Traffic congestion}}
[[File:I-80 Eastshore Fwy.jpg|thumb|right|200px|Typical traffic congestion in an urban freeway. Shown here is [[Interstate 80|I-80]] [[Eastshore Freeway]] in [[Berkeley, California|Berkeley]], California.]]

Traffic congestion is a negative externality caused by various factors. A 2005 American study stated that there are seven root causes of congestion, and gives the following summary of their contributions: bottlenecks 40%, traffic incidents 25%, bad weather 15%, work zones 10%, poor signal timing 5%, and special events/other 5%.<ref>{{cite web|title=Traffic Congestion and Reliability: Trends and Advanced Strategies for Congestion Mitigation|date=1 September 2005|url=http://www.ops.fhwa.dot.gov/congestion_report/congestion_report_05.pdf|publisher=U.S. Federal Highway Administration|access-date=2008-02-28|archive-date=29 June 2019|archive-url=https://web.archive.org/web/20190629125056/https://ops.fhwa.dot.gov/congestion_report/congestion_report_05.pdf|url-status=dead}}</ref> Within the transport economics community, [[congestion pricing]] is considered to be an appropriate mechanism to deal with this problem (i.e. to internalise the externality) by allocating scarce roadway capacity to users. Capacity expansion is also a potential mechanism to deal with traffic congestion, but is often undesirable (particularly in urban areas) and sometimes has questionable benefits (see [[induced demand]]). [[William Vickrey]], winner of the 1996 [[Nobel Memorial Prize in Economic Sciences|Nobel Prize]] for his work on "[[moral hazard]]", is considered one of the fathers of congestion pricing, as he first proposed it for the [[New York City Subway]] in 1952.<ref>{{Cite web|author= Vickrey, William | year=1992|url=http://www.vtpi.org/vickrey.htm|title= Principles of Efficient Congestion Pricing|access-date=2008-02-26|publisher = Victoria Transport Policy Institute}}</ref>
In the road transportation arena these theories were extended by [[Maurice Allais]], a fellow Nobel prize winner "for his pioneering contributions to the theory of markets and efficient utilization of resources", [[Gabriel Roth (economist)|Gabriel Roth]] who was instrumental in the first designs and upon whose [[World Bank]] recommendation<ref>{{Cite book | last = Walters | first = A. A. | year = 1968 | title = The Economics of Road User Charges| publisher = World Bank Staff Occasional Papers Number Five, Chapter VII, Washington, D.C. pp. 191–217| isbn = 978-0-8018-0653-7}}</ref> the first system was put in place in Singapore. [[Reuben Smeed]], the deputy director of the [[Transport Research Laboratory|Transport and Road Research Laboratory]] was also a pioneer in this field, and his ideas were presented to the British government in what is known as the [[Smeed Report]].<ref>{{cite book |last=Smeed |first=R.J. |year=1964 |title=Road pricing: the economic and technical possibilities |url=https://archive.org/details/op1265810-1001 |publisher=HMSO}}</ref>

Congestion is not limited to road networks; the negative externality imposed by congestion is also important in busy public transport networks as well as crowded pedestrian areas, e.g. on the London Underground on a weekday or any urban train station, at peak times. There is the classical excess in demand compared to supply. This is because at peak times there is a large demand for trains, since people want to go home (i.e., a derived demand). However, space on the platforms and on the trains is limited and small compared to the demand for it. As a result, there are crowds of people outside the train doors and in the train station corridors. This increases delays for commuters, which can often cause a rise in stress or other problems.

==== Congestion pricing ====
{{main|Congestion pricing|Road pricing}}
[[Image:ERPBugis.JPG|thumb|right|200px|[[Electronic Road Pricing]] Gantry at North Bridge Road, Singapore]]

Congestion pricing is an [[Pareto efficiency|efficiency pricing]] strategy that requires the users to pay more for that public good, thus increasing the welfare gain or net benefit for society.<ref>{{Cite journal | last = Button | first = Kenneth J. | year = 1993 | title = op. cit| pages = 153}}</ref><ref>{{Cite journal|author1=Small, Kenneth A. |author2=Verhoef, Erik T. | title = op. cit| year = 2007| pages = 120}}</ref> Congestion pricing is one of a number of alternative [[Supply and demand|demand side]] (as opposed to [[supply side]]) strategies offered by economists to address congestion.<ref name="prm_winter_1995">{{cite journal |title=Congestion Control and Demand Management |author1=Sheldon G. Strickland |author2=Wayne Ber |name-list-style=amp |date=Winter 1995 |volume=58 |issue=3 |journal=Public Roads Magazine |publisher=U.S. Federal Highway Administration |url=http://www.tfhrc.gov/pubrds/winter95/p95wi1.htm |access-date=2008-02-28 |archive-url=https://web.archive.org/web/20080317165147/http://www.tfhrc.gov/pubrds/winter95/p95wi1.htm |archive-date=17 March 2008 |url-status=dead |df=dmy-all }}</ref> Congestion pricing was first implemented in [[Area Licensing Scheme|Singapore]] in 1975, together with a comprehensive package of [[road pricing]] measures, stringent car ownership rules and improvements in mass transit.<ref>{{Cite book |author1=Small, Kenneth A. |author2=Verhoef, Erik T. | year = 2007 | title = The Economics of Urban Transportation |url=https://archive.org/details/economicsurbantr00smal |url-access=limited | publisher = Routledge, England| isbn = 978-0-415-28515-5 | pages = [https://archive.org/details/economicsurbantr00smal/page/n164 148] }}</ref><ref>{{cite web | url=http://www.move-forum.net/documenti/B_06032003170931.pdf | title=Road pricing Singapore's experience | author = Chin Kian Keong | date=23 October 2002 | publisher = Third Seminar of the IMPRINT-EUROPE Thematic Network: “Implementing Reform on Transport Pricing: Constraints and solutions: learning from best practice” | access-date=2008-04-16|archive-url = https://web.archive.org/web/20080410123530/http://www.move-forum.net/documenti/B_06032003170931.pdf <!-- Bot retrieved archive --> |archive-date = 10 April 2008}}</ref> Thanks to technological advances in [[electronic toll collection]], Singapore upgraded its system in 1998<ref>{{cite web  | url=http://www.lta.gov.sg/motoring_matters/index_motoring_erp.htm  | title=Electronic Road Pricing  | publisher=Land Transport Authority (Singapore). Website oficial  | access-date=2008-04-16  | archive-url=https://web.archive.org/web/20080410143342/http://www.lta.gov.sg/motoring_matters/index_motoring_erp.htm  | archive-date=10 April 2008  | url-status=dead  }}</ref> (see [[Electronic Road Pricing|Singapore's Electronic Road Pricing]]). Similar pricing schemes were implemented in [[Rome#Motor Traffic Limited Zone (ZTL)|Rome]] in 2001, as an upgrade to the manual zone control system implemented in 1998;<ref>{{cite web| url=http://www.cfit.gov.uk/map/europe-italy-rome.htm| title=Road Charging Scheme: Europe – Italy, Rome| publisher=UK Commission for Integrated Transport| access-date=2008-04-16| url-status=dead| archive-url=https://web.archive.org/web/20080411181654/http://www.cfit.gov.uk/map/europe-italy-rome.htm| archive-date=11 April 2008| df=dmy-all}}</ref><ref>{{cite web| url=http://www.progress-project.org/Progress/rome.html| title=The history of Limited Access Zones in Rome| publisher=PRoGR€SS Project| access-date=2008-04-16| url-status=dead| archive-url=https://web.archive.org/web/20080309210332/http://www.progress-project.org/Progress/rome.html| archive-date=9 March 2008| df=dmy-all}}</ref>
London in 2003 and extended in 2007 (see [[London congestion charge]]); [[Stockholm]] in 2006, as seven-month trial, and then on a permanent basis since August 2007<ref>{{cite web | url=http://www.vv.se/templates/page3____17154.aspx | title=Congestion tax in Stockholm | date=21 August 2007 | publisher=Swedish Road Administration | access-date=2008-04-16 | url-status=dead | archive-url=https://web.archive.org/web/20070302045327/http://www.vv.se/templates/page3____17154.aspx | archive-date=2 March 2007 | df=dmy-all }}</ref> (see [[Stockholm congestion tax]]).

=== Pollution pricing ===
{{main|Pollution pricing}}
[[File:Energy Efficiency of different Transport Modes.png|thumb|Energy Efficiency of different Transport Modes]]
From 2008 to 2011, [[Milan]] had a traffic charge scheme, [[Ecopass]], that exempted higher emission standard vehicles ([[Euro IV]]) and other [[alternative fuel vehicle]]s<ref>{{cite news | url=https://www.nytimes.com/2008/01/27/automobiles/27GREEN.html  | title=Toll Discounts for Going Green  | author = Ken Belson | date=27 January 2008 | newspaper =The New York Times  | access-date=2008-01-27}}</ref><ref>.{{cite news | url=http://news.bbc.co.uk/2/hi/europe/7167992.stm  | title=Milan introduces traffic charge  | date=2 March 2008 | work = BBC News | access-date=2008-01-17}}</ref><ref>{{cite news | url = http://www.nysun.com/article/68854 | title = Milan Introduces Congestion Charge To Cut Pollution | author = Marco Bertacche | date = 3 January 2008 | newspaper = The New York Sun | access-date = 2008-01-17 | archive-date = 31 August 2020 | archive-url = https://web.archive.org/web/20200831015107/https://www.nysun.com/foreign/milan-introduces-congestion-charge-to-cut/68854/ | url-status = dead }}</ref> This was later replaced by a more conventional [[congestion pricing]] scheme, [[Milan Area C|Area C]].

Even the transport economists who advocate congestion pricing have anticipated several practical limitations, concerns and controversial issues regarding the actual implementation of this policy. As summarized by noted regional planner [[Robert Cervero]]:<ref>{{Cite book | last = Cervero | first = Robert | author-link=Robert Cervero|year = 1998 | title = The Transit Metropolis | publisher = Island Press, Washington, D.C. | isbn = 1-55963-591-6  <!--"Setting the prices right"-->| pages = 67–68}}</ref> "True social-cost pricing of metropolitan travel has proven to be a theoretical ideal that so far has eluded real-world implementation. The primary obstacle is that except for professors of transportation economics and a cadre of vocal environmentalists, few people are in favor of considerably higher charges for peak-period travel. Middle-class motorists often complain they already pay too much in gasoline taxes and registration fees to drive their cars, and that to pay more during congested periods would add insult to injury. In the United States, few politicians are willing to champion the cause of congestion pricing in fear of reprisal from their constituents... Critics also argue that charging more to drive is elitist policy, pricing the poor off of roads so that the wealthy can move about unencumbered. It is for all these reasons that peak-period pricing remains a pipe dream in the minds of many."

==== Road space rationing ====
{{main|Road space rationing}}
[[File:Traffic jam Sao Paulo 09 2006 30.JPG|thumb|right|200px|Traffic congestion persists in [[São Paulo]], [[Brazil]], despite no-drive days based on license numbers.]]

Transport economists consider [[road space rationing]] an alternative to congestion pricing, but road space rationing is considered more equitable, as the restrictions force all drivers to reduce auto travel, while congestion pricing restrains less those who can afford paying the congestion charge. Nevertheless, high-income users can avoid the restrictions by owning a second car.<ref>{{cite web |author= |title=Vehicle Restrictions. Limiting Automobile Travel at Certain Times and Places |url=http://www.vtpi.org/tdm/tdm33.htm |access-date=2008-04-09 |website=Victoria Transport Policy Institute |publisher=TDM Encyclopedia}} See Equity Impacts section</ref> Moreover, congestion pricing (unlike rationing) acts "to allocate a scarce resource to its most valuable use, as evinced by users' willingness to pay for the resource". While some "opponents of congestion pricing fear that tolled roads will be used only by people with high income. But preliminary evidence suggests that the new toll lanes in California are used by people of all income groups. The ability to get somewhere fast and reliably is valued in a variety of circumstances. Not everyone will need or want to incur a toll on a daily basis, but on occasions when getting somewhere quickly is necessary, the option of paying to save time is valuable to people at all income levels." Road space rationing based on license numbers has been implemented in cities such as [[Athens]] (1982),<ref>{{cite web|url=http://www.leda.ils.nrw.de/database/measures/meas0205.htm|title=LEDA Measure: License plate based traffic restrictions, Athens, Greece|publisher=LEDA database|access-date=2008-04-09|url-status=dead|archive-url=https://web.archive.org/web/20080227030125/http://www.leda.ils.nrw.de/database/measures/meas0205.htm|archive-date=27 February 2008|df=dmy-all}}</ref> [[México City]] (1989), [[São Paulo]] (1997), [[Santiago de Chile|Santiago]], [[Chile]], [[Bogotá]], [[Colombia]], La Paz (2003),<ref>{{cite news | url=http://www.boliviahoy.com/modules/news/article.php?storyid=3150 | title=Los choferes públicos acataron la restricción | date=7 January 2003 | newspaper=La Prensa | access-date=2008-04-09 | language=es | archive-url=https://web.archive.org/web/20061213053528/http://www.boliviahoy.com/modules/news/article.php?storyid=3150 | archive-date=13 December 2006 | url-status=dead | df=dmy-all }}</ref> [[Bolivia]], and [[San José de Costa Rica|San José]] (2005),<ref>{{cite news | url=http://www.nacion.com/ln_ee/2005/agosto/03/pais0.html | archive-url=http://arquivo.pt/wayback/20160515152117/http://www.nacion.com/ln_ee/2005/agosto/03/pais0.html | url-status=dead | archive-date=15 May 2016 | title=Hoy empieza restricción para autos en centro de San José | author=Ángela Ávalos | date=3 August 2005 | newspaper=La Nación | access-date=2008-04-08 | language=es }}</ref><ref>{{cite news | url=http://www.nacion.com/ln_ee/2006/abril/12/pais2.html | title=Evaluarán restricción vehicular en capital | author=Mercedes Agüero | date=12 April 2006 | newspaper=La Nación | access-date=2008-04-08 | language=es | url-status=dead | archive-url=https://web.archive.org/web/20080919101624/http://www.nacion.com/ln_ee/2006/abril/12/pais2.html | archive-date=19 September 2008 | df=dmy-all }}</ref> [[Costa Rica]].

==== Tradable mobility credits ====
A more acceptable policy on automobile travel restrictions, proposed by transport economists<ref>{{Cite web | author = Verhoef E, [[Peter Nijkamp|Nijkamp P]], Rietveld P | url = http://www.envplan.com/abstract.cgi?id=b240527 | year = 1997 | title = Tradeable permits: their potential in the regulation of road transport externalities | publisher = Environment and Planning B: Planning and Design 24(4) 527–548 |access-date=2008-04-11  }}</ref> to avoid inequality and revenue allocation issues, is to implement a [[rationing]] of peak period travel but through revenue-neutral credit-based congestion pricing. This concept is similar to the existing system of [[emissions trading]] of [[carbon credit]]s, proposed by the [[Kyoto Protocol]] to curb [[greenhouse emissions]]. Metropolitan area or city residents, or the taxpayers, will have the option to use the local government-issued mobility rights or congestion credits for themselves, or to trade or sell them to anyone willing to continue traveling by automobile beyond the personal quota. This trading system will allow direct benefits to be accrued by those users shifting to public transportation or by those reducing their peak-hour travel rather than the government.<ref>{{Cite journal|doi=10.1016/S0967-070X(01)00024-5     |title=Making urban road pricing acceptable and effective: Searching for quality and equity in urban mobility |year=2001 |last1=Viegas |first1=José M. |journal=Transport Policy |volume=8 |issue=4 |pages=289–294 }}</ref><ref>{{Cite journal|doi=10.1016/j.tra.2005.02.014     |title=Credit-based congestion pricing: A policy proposal and the public's response |year=2005 |last1=Kockelman |first1=Kara M. |last2=Kalmanje |first2=Sukumar |journal=Transportation Research Part A: Policy and Practice |volume=39 |issue=7–9 |pages=671–690 |bibcode=2005TRPA...39..671K }}</ref>

== Funding and financing ==
[[File:Corridor Capacity and Infrastructure Costs.png|thumb|Corridor Capacity and Infrastructure Costs]]
Methods of funding and financing transport network maintenance, improvement and expansion are debated extensively and form part of the transport economics field.<ref>{{cite web|title=Business models for transport infrastructure assets? Some experiences in Europe. In The decision-making process for infrastructural investment choices|date=2020|url=https://www.francoangeli.it/Ricerca/scheda_libro.aspx?Id=26150|publisher=FrancoAngeli}}</ref><ref>{{cite journal | last1 = Cardenas | first1 = I. | last2 = Voordijk | first2 = H | last3 = Geert | first3 = D. | year = 2018 | title = Beyond project governance. Enhancing funding and enabling financing for infrastructure in transport. Findings from the importance analysis approach | url = https://research.utwente.nl/en/publications/beyond-project-governance-enhancing-funding-and-enabling-financin| journal = European Journal of Transport and Infrastructure Research  | volume = 18 | issue = 4| doi=10.18757/ejtir.2018.18.4.3261| doi-access = free }}</ref>

Funding issues relate to the ways in which money is raised for the supply of transport capacity. Taxation and [[user fees]] are the main methods of fund-raising. Taxation may be general (e.g. [[income tax]]), local (e.g. [[sales tax]] or [[land value tax]]) or variable (e.g. [[fuel tax]]), and user fees may be tolls, congestion charges or fares. The method of funding often attracts strong political and public debate.

Financing issues relate to the way in which these funds are used to pay for the supply of transport. Loans, [[Bond (finance)|bonds]], [[public–private partnership]]s and concessions are all methods of financing transport investment.

== Regulation and competition ==
Regulation of the supply of transport capacity relates to both safety regulation and [[regulatory economics|economic regulation]]. Transport economics considers issues of the economic regulation of the supply of transport, particularly in relation to whether transport services and networks are provided by the public sector, by the private sector, or a mixture of both.

Transport networks and services can take on any combination of regulated/deregulated and public/private provision. For example, bus services in the UK outside London are provided by both the public and private sectors in a deregulated economic environment (where no-one specifies which services are to be provided, so the provision of services is influenced by the [[Market (economics)|market]]), whereas bus services within London are provided by the private sector in a regulated economic environment (where the public sector specifies the services to be provided and the private sector competes for the right to supply those services – i.e. [[franchising]]).

The regulation of public transport is often designed to achieve some social, geographic and temporal equity as market forces might otherwise lead to services being limited to the most popular travel times along the most densely settled corridors of development.  National, regional or municipal taxes are often deployed to provide a network that is socially acceptable (e.g. extending timetables through the daytime, weekend, holiday or evening periods and intensifying the mesh of routes beyond that which a lightly regulated market would probably provide).

Franchising may be used to create a supply of transport that balances the free-market supply outcome and the most socially desirable supply outcome.

== Project appraisal and evaluation ==
[[File:Cost-Benefit of Cycling.png|thumb|500px]]
The most sophisticated methods of project appraisal and evaluation have been developed and applied in the transport sector. The terms ''appraisal'' and ''evaluation'' are often confused in relation to the assessment of projects. Appraisal refers to ''ex ante'' (before the event) assessment and evaluation refers to ''ex post'' (after the event) assessment.<ref>{{cite web |title=Green Book, Appraisal and evaluation in central government |date=15 March 2023 |url=http://www.hm-treasury.gov.uk/economic_data_and_tools/greenbook/data_greenbook_index.cfm |publisher=HM Treasury 2003}}</ref>

===Appraisal===

The appraisal of changes in the transport network is one of the most important applications of transport economics. In order to make an assessment of whether any given transport project should be carried out, transport economics can be used to compare the costs of the project with its benefits (both social and financial). Such an assessment is known as a [[cost-benefit analysis]], and is usually a fundamental piece of information for decision-makers, as it places a value on the net benefits (or disbenefits) of schemes and generates a ratio of benefits to costs which may be used to prioritise projects when funding is constrained.

A primary difficulty in project appraisal is the [[value of time|valuation of time]]. Travel time savings are often cited as a key benefit of transport projects, but people in different occupations, carrying out different activities and in different social classes value time differently.

Appraising projects on the basis of their supposed reductions in travel times has come under scrutiny in recent years with the recognition that improvements in capacity generate trips that would not have been made ([[induced demand]]), partially eroding the benefits of reduced travel times. Therefore, an alternative method of appraisal is to measure changes in [[land (economics)|land value]] and consumer benefits from a transport project rather than the measuring benefits accruing to travellers themselves. However, this method of analysis is much more difficult to carry out.

Another problem is that many transport projects have impacts that cannot be expressed in monetary terms, such as impacts on, for example, local air quality, biodiversity and community severance. Whilst these impacts can be included in a detailed [[environmental impact assessment]], a key issue has been how to present these assessments alongside estimates of those costs and benefits that can be expressed in monetary terms. Recent developments in transport appraisal practice in some European countries have seen the application of [[multi-criteria decision analysis]] based decision support tools. These build on existing [[cost-benefit analysis]] and environmental impact assessment techniques and help decision makers weigh up the monetary and non-monetary impacts of transport projects. In the UK, one such application, the [[New Approach to Appraisal]] has become a cornerstone of UK transport appraisal.

===Evaluation===

The evaluation of projects enables decision makers to understand whether the benefits and costs that were estimated in the appraisal materialised. Successful project evaluation requires that the necessary data to carry out the evaluation is specified in advance of carrying out the appraisal.

The appraisal and evaluation of projects form stages within a broader policy making cycle that includes:
* identifying a rationale for a project
* specifying objectives
* appraisal
* monitoring implementation of a project
* evaluation
* feedback to inform future projects

==Social effects on poverty==

In the US those with low income living in cities face a problem called “poverty transportation.” The problem arises because many of the entry-level jobs which are sought out by those with little education are typically located in suburban areas. Those jobs are also not very accessible by public transportation because the transportation was often designed to move people around cities, which becomes a problem when the jobs are no longer located in the cities. Those who cannot afford cars inevitably suffer the worst, because they have no choice but to rely on public transport. The problem is illustrated by an estimation that 70% of entry-level jobs are located in the suburbs, while only 32% of those jobs are within a quarter mile of public transportation.<ref name="SanchezThomas">Sanchez, Thomas. ''Poverty, policy, and public transportation''. Department of City & Metropolitan Planning, University of Utah, 2005.</ref> More difficult (or more expensive) access to jobs and other goods & services can act as a [[ghetto tax]].

As a result of the transportation systems in use, but not adequately meeting the needs of those who rely on them, they tend to generate low revenue. And with minimal revenue or funding the transportation systems are forced to decrease service and increase fares, which causes those in poverty to face more inequality. Further those who live in cities with no public transportation become even more excluded from education and work. In places with no public transport a car is the only viable option and that creates unnecessary strain on the roads and environment.<ref>Rose, Spencer. ''The Social Inequality of Public Transit'' 2010.</ref>

Since automobile use tends to be greater than public transportation use, it also becomes the norm for people to work towards car ownership. Private car ownership has led to a large allocation of resources towards road and bridge maintenance. But underfunding of public transportation prevents everyone who needs transportation from having access to it. And those who can choose between public transportation and private transportation will choose private transportation rather than face the inconveniences of public transportation. The lack of customers willing to use public transport creates a cycle that ultimately never leads to the transportation systems making significant progress.<ref>Colby, Greg. ''Urban Sprawl, Auto Dependency and Poverty''.</ref> Another reason for low private vehicle ownership among welfare recipients are the established asset limitations. In the U.S. the asset limit is $1000 per vehicle. This forces welfare recipients to purchase old and sub standard vehicles in order not to lose their welfare funding.<ref name="SanchezThomas" />

There are a number of ways in which public transportation could be improved and for it to become a better and more enticing option for other people who do not necessarily depend on it. Some of these include creating networks of overlapping routes even among different operators to give people more choice in where and how they want to go somewhere. The system should also function as a whole, to prevent drivers from dangerously racing along routes to increase profit. Providing incentives to use public transportation can also be beneficial, as ridership increases the transportation systems can appropriately respond by increasing the frequency along those transportation routes. Even creating bus only lanes or priority lanes at intersections could improve service and speed.<ref>Munoz, Juan and Grange, Louis. ''On the development of public transit in large cities''. Department of Transport Engineering and Logistics, Pontificia Universidad Católica de Chile, 2010.</ref>

Experiments done in Africa (Uganda and Tanzania) and Sri Lanka on hundreds of households have shown that [[bicycle poverty reduction|a bicycle can increase the income]] of a poor family by as much as 35%.<ref>{{Cite web |title=An Analysis of the Huge Unnoticed Potential Increased Bicycle Density has in Accelerating Rural Growth in India. |url=http://www.bicyclepotential.org/ |access-date=2022-06-30 |website=BicyclePotential.org |language=en |archive-date=25 June 2011 |archive-url=https://web.archive.org/web/20110625154846/http://www.bicyclepotential.org/ |url-status=dead }}</ref> Transport, if analyzed for the cost-benefit analysis for rural poverty alleviation, has given one of the best returns in this regard. For example, road investments in India were a staggering 3–10 times more effective than almost all other investments and subsidies in rural economy in the decade of the 1990s. What a road does at a macro level to increase transport, the bicycle supports at the micro level. Bicycle, in that sense, can be one of the best means to eradicate the poverty in poor nations.

==Car taxation==
Car taxation is an instrument to influence the purchase decisions of consumers. Taxes can be differentiated to support the market introduction of fuel efficient and low [[carbon dioxide]] (CO<sub>2</sub>) emitting cars.

The European Union Commission has made a proposal for a Council Directive on passenger car taxation which is currently before the Council and Parliament.<ref>[http://ec.europa.eu/governance/impact/docs/ia_2005_2/COM_2005_0261_F_EN.pdf COM(2005) 261, Proposal for a COUNCIL DIRECTIVE on passenger car related taxes, presented by the Commission]{{Dead link|date=July 2018 |bot=InternetArchiveBot |fix-attempted=no }}</ref>

The Commission encourages again Member States to adopt this proposal as soon as possible and to adapt their car taxation policies so as to promote the purchase of fuel efficient cars throughout the EU and help manufacturers respect the upcoming fuel efficiency framework, thus contributing their share to reducing the CO<sub>2</sub> emissions of cars. Taxes differentiated over the whole range of cars on the market, so as to gradually induce a switch towards less emitting cars, would be an efficient way to reduce compliance costs for manufacturers.

===Tax rates on acquisition===

In 2011, for a brand new [[Volkswagen Golf#Sixth generation (Mk6/A6, Typ 5K; 2008)|VW Golf]] Trendline (80 [[Pferdestärke#Metric horsepower .28PS.2C cv.2C hk.2C pk.2C ks.2C ch.29|PS]], 5G 2T) the taxation rate (all inclusive, i.e. VAT+registration tax+any other taxes) on acquisition was as follows:<ref name=euReport>{{cite journal|last=Commission|first=European|title=Car prices within the European Union|journal=Autopreise in der Europäischen Union Am ... = Car Prices within the European Union = Prix des Voitures Au Sein de l'Union Européenne|date=1 January 2011|pages=212|doi=10.2763/50581|url=http://ec.europa.eu/competition/sectors/motor_vehicles/prices/2011_07_full.pdf|access-date=15 December 2013|publisher=European Union|location=Brussels|isbn=9789279201363|language=BG, ES, CS, DA, DE, ET, EL, EN, FR, IT, LV, LT, HU, MT, NL, PL, PT, RO, SK, SL, FI, SV|issn=1725-9991}}</ref>

{| class="wikitable sortable"
|-
! Country!!After tax (in €)!!Before tax (in €)!!Taxation rate (%)
|-
| Denmark||28267||11629||143.07
|-
| Finland||18000||11795||52.61
|-
| Netherlands||19543||13191||48.15
|-
| Ireland||18036||12712||41.88
|-
| Sweden||18576||14299||29.91
|-
| Latvia||14352||11292||27.1
|-
| Austria||17995||14202||26.71
|-
| Lithuania||14024||11292||24.19
|-
| Romania||14419||11628||24
|-
| Poland||14215||11557||23
|-
| Italy||17379||14141||22.9
|-
| Spain||17415||14187||22.75
|-
| Hungary||16918||13790||22.68
|-
| Cyprus||15292||12586||21.5
|-
| Belgium||17754||14673||21
|-
| Czech Rep.||14059||11715||20.01
|-
| Bulgaria||14347||11956||20
|-
| United Kingdom||17078||14232||20
|-
| Slovenia||15274||12729||19.99
|-
| France||15478||12942||19.6
|-
| Germany||16825||14139||19
|-
| Luxembourg||15300||13305||14.99
|-
| Greece||N/A||N/A||N/A
|-
| Malta||N/A||N/A||N/A
|-
| Portugal||N/A||N/A||N/A
|-
| Slovakia||N/A||N/A||N/A
|-
| Estonia||N/A||N/A||N/A
|}

== See also ==
{{div col|colwidth=30em}}
* [[Car costs]]
* [[Car dependency]]
* [[Economics of car use]]
* [[Effects of the car on societies]]
* [[Externalities of automobiles]]
* [[Free public transport]]
* [[Infrastructure]]
* [[List of important publications in economics]]
* [[Low-emission zone]]
* [[Outline of economics]]
* [[Peak car]]
* [[Rail subsidies]]
* [[Road space rationing]]
* [[Road tax]]
* [[Sustainable transport]]
* [[Transit-oriented development]]
* [[Transport divide]]
* [[Transport finance]]
* [[Vignette (road tax)]]
{{div col end}}

== References ==
{{Reflist}}

==External links==
* [http://www.civilengineerbuddy.com/transportation-economics-an-introduction-transportation-engineering/ Introduction to Transportation economics – Transportation Engineering] {{Webarchive|url=https://web.archive.org/web/20180714170405/http://www.civilengineerbuddy.com/transportation-economics-an-introduction-transportation-engineering/ |date=14 July 2018 }}

{{Population}}
{{Wikibooks|Transportation Economics}}

{{DEFAULTSORT:Transport Economics}}
[[Category:Transport economics| ]]
[[Category:Regional science]]