Win-Win Transportation Solutions
Cost-Effective, Market-Based Strategies To Encourage Efficient Transport
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Victoria Transport Policy Institute
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Updated 27 February 2017
Win-Win Solutions are technically feasible, cost effective, market-based strategies that provide a combination of economic, social and environmental benefits. They remove distortions, increase consumer choice, and encourage more efficient travel behavior. They are justified for their economic benefits (reductions in congestion, facility costs, vehicle costs, crash costs) and also help achieve environmental and social objectives. They are particularly appropriate for creating more sustainable transportation systems.
Win-Win Transportation Solutions are technically feasible, cost effective market reforms that help solve transportation problems by removing distortions, increasing consumer options, and encouraging more efficient travel behavior. Most Win-Win Solutions require no new institutions or organizations.
Win-Win Solutions (also called Double Dividend and Policy Hitchhiking) help achieve multiple economic, social and environmental objectives, or at least they do not contradict any of these objectives. The table below illustrates this concept. Win-Win Solutions consist of the strategies that have only positive or neutral impacts in all categories.
Table 1 Identifying Win-Win Solutions
|
Economic |
Social/Equity |
Environmental |
|
Strategy 1 |
Positive |
Negative |
Negative |
|
Strategy 2 |
Positive |
Negative |
Neutral |
|
Strategy 3 |
Positive |
Positive |
Positive |
Win-Win Strategy |
Strategy 4 |
Positive |
Neutral |
Positive |
Win-Win Strategy |
Strategy 5 |
Negative |
Positive |
Positive |
|
Win-Win Solutions consist of strategies that have only positive or neutral impacts on economic, social and environmental objectives.
Many conventional transportation improvement strategies solve one or two problems, but exacerbate others (Why Manage Transportation Demand?). For example, adding roadway capacity may help reduce traffic congestion but it tends to increase total traffic volumes and vehicle mileage, which contradicts other economic, social and environmental objectives (Rebound Effect). Fuel efficiency standards help achieve environmental objectives, but by reducing vehicle-operating costs they can increase congestion, crashes and urban sprawl (Litman 2002). Conventional transportation planning tends to undervalue Win-Win Solutions, because it overlooks many of the benefits of increased transportation diversity, and the problems that result from increased motor vehicle traffic. More Comprehensive Transport Planning is needed to identify the full potential benefits of Win-Win solutions.
Win-Win Solutions are “no regrets” measures that minimize such conflicts. They are justified regardless of the value placed on non-market environmental and social objectives. Although their individual impacts may appear modest, their combined benefits can be substantial. If fully implemented to the degree that they are economically justified Win-Win Solutions could reduce motor vehicle impacts by 15-30%, or more if coordinated with other TDM policies. They could meet Kyoto emission reduction targets while increasing consumer benefits and economic development. They are particularly important to help achieve more Sustainable Transportation.
These are, admittedly, big claims. To understand why such large benefits are possible it is useful to consider some basic Market Principles. Efficient markets have certain requirements, including consumer choice, competition, cost-based pricing, and economic neutrality in public policies. Most markets generally reflect these principles. Consumers pay directly for most costs of producing the housing, food and clothing they use. But transportation markets often violate these principles. Win-Win Solutions tend to correct these distortions, as described in Table 2. This tends to increase Equity and Economic Development.
Table 2 Win-Win Solutions Support Market Efficiency (Market Principles)
Market Requirements |
Current Market Distortions |
Win-Win Solutions |
Consumer options (also called consumer sovereignty). Consumers need viable transport and location options, and information about those options. |
Consumers often have few viable alternatives to owning and driving an automobile, and living in automobile dependent communities. |
Many Win-Win Solutions increase travel choice, directly. Virtually all increase choice indirectly by increasing demand for travel alternatives. |
Competition. Producers must face competition to encourage innovation and efficient pricing. |
Most roads and public transit services are provided as public monopolies. There is often little competition or incentive for innovation. |
Many Win-Win Solutions remove barriers, and encourage competition and innovation. |
Cost-based pricing. Prices should reflect costs as much as possible. There should be no significant external costs unless specifically justified. |
Transportation in general, and driving in particular, is significantly underpriced: most costs are either fixed or external. This results in economically excessive levels of driving and automobile dependency. |
Many Win-Win Solutions result in more efficient pricing. Some require subsidies, but these are often less than current subsidies for driving, or justified on equity grounds. |
Economic neutrality. Public policies (laws, taxes, subsidies, and investment policies) should apply equally to comparable goods and users. |
Tax policies, and many transportation planning and funding practices favor automobile traffic over demand management alternatives. |
Many Win-Win Solutions help correct existing biases in transportation planning and investment practices. |
Land Use. Land use policies should not favor automobile oriented development. |
Zoning laws, development practices and utility pricing tend to encourage lower-density, automobile-dependent land use patterns. |
Some Win-Win Solutions correct existing land use planning biases. Virtually all encourage more efficient land use by discouraging automobile dependency. |
Win-Win Solutions tend to correct market distortions, resulting in a more efficient and equitable transportation system.
This is not to suggest that driving is bad, or that it provides no benefits. But in a more efficient and neutral transport market consumers would choose to drive less than they do now and be better off as a result (Litman, 2007). As an analogy, food is essential for life and therefore provides tremendous benefits. However, this does not mean that more eating is necessarily better, that current diets are optimal, or that society should subsidize all food. At the margin (relative to current consumption) many people would benefit from eating less. If taxes subsidize food, we eat more but have less of things that are taxed, such as jobs, housing and clothes. Food subsidies may be justified for undernourished people, but since over-eating can be as unhealthy as under-eating it is both economically and medically harmful to subsidize all food for everybody.
Similarly, that mobility provides benefits does not necessarily mean that more driving is better, that current levels of driving are optimal, or that driving should be subsidized. Transport underpricing is harmful because it requires subsidies from other economic sectors and results in excessive travel that increases many problems. Public policies that favor roadway investments, and automobile-oriented land use patterns are also harmful overall because they reduce travel choices and result in inefficient use of resources.
These inefficiencies are cumulative, so analysis of just one impact underestimates the total harm that results from price distortions, and the potential benefits from market reforms. For example, underpriced parking not only encourages inefficient use of parking facilities, it also exacerbates traffic congestion, roadway costs, crashes and pollution. Similarly, underpricing road use increases not only congestion and roadway costs, but also parking costs, traffic accidents and pollution.
Win-Win Solutions are a type of preventive medicine, equivalent to putting the transportation system on a healthier diet. This can avert more difficult and expensive measures that would otherwise be required to address the various problems resulting from increased motor vehicle traffic.
Some people are skeptical that Win-Win strategies are feasible, because they require consumers to change their travel habits or support policy changes, such as pricing reforms. Although such changes may be difficult to implement, there are examples of successes, including recycling, smoking reductions and seat belt use. In each case, a combination of public education, policy changes and support services have had a dramatic impact on behavior patterns, indicating that consumers support such changes both individually and politically.
Most transportation improvements help solve one or two problems, but they often exacerbate others. For example, expanding highways reduces congestion but tends to increase total vehicle traffic, which increases parking, accident and pollution problems. Similarly, increasing vehicle fuel efficiency conserves energy but by reducing vehicle operating costs tends to increase total vehicle travel and therefore congestion, parking and accident problems (Litman 2005). These indirect impacts are often overlooked, which exaggerates highway expansion and fuel efficiency benefits, and undervalues Win-Win strategies. Only by considering all impacts are total Win-Win benefits perceived. Table 3 illustrates this concept. When all impacts are considered, Win-Win strategies often turn out to be the most cost effective and beneficial solutions to transportation problems.
Table 3 Comparing Strategies (Litman 2006a)
Planning Objective |
Roadway Expansion |
Fuel Efficient Vehicles |
Win-Win Solutions |
User convenience and comfort |
ü |
û |
ü |
Congestion reduction |
ü |
û |
ü |
Parking cost savings |
û |
û |
ü |
Roadway facility costs savings |
û |
û |
ü |
Consumer costs savings |
û |
|
ü |
Reduced traffic accidents |
û |
û |
ü |
Improved mobility options |
û |
|
ü |
Energy conservation |
û |
ü |
ü |
Pollution reduction |
û |
ü |
ü |
Physical fitness and health |
û |
|
ü |
Land use objectives |
û |
û |
ü |
Some transport improvement strategies help achieve one or two objectives (ü), but by increasing total vehicle travel contradict others (û). Win-Win strategies reduce total motor vehicle travel, and so support many planning objectives, providing multiple economic, social and environmental benefits.
Although Win-Win Solutions can significantly reduce vehicle travel, consumers can benefit overall. Most Win-Win Solutions use positive incentives, so consumers only reduce their driving when they consider themselves better off. Motorists who ignore the opportunity to save money can continue driving at current levels and be no worse off, and would benefit from reduced congestion, crash risk and pollution (Criticism of TDM).
For example, Parking Cash Out, Location Efficient Development and Distance-Based Vehicle Insurance simply return to individual motorists more of the savings that result when they drive less. Consumers who continue their current transport patterns pay no more on average, but they have a new opportunity to save money that does not currently exist. Other TDM strategies improve Transportation Options by improving Pedestrian and Cycling Conditions, Rideshare Services, Public Transit, Transit Stations, and Telework. Access Management, Smart Growth and New Urbanism land use policies help reduce the need to travel (for example, by locating more stores and schools in residential neighborhoods) and increases travel options. Many trips would not change, but marginal travel decisions would be affected. Consumers could consolidate trips, choose closer destinations, and use alternatives. Individually the changes would be modest, but their cumulative impacts can be large.
Win-Win Solutions also tend to increase equity. For example, Parking Cash Out means that non-drivers receive employee benefits comparable in value to the parking subsidies given motorists. Location Efficient Development allows non-drivers to avoid paying for parking spaces they don’t need. Distance-Based Vehicle Insurance avoids cross-subsidies from low- to high-mileage motorists. Virtually all Win-Win Solutions increase travel choices for people who cannot drive due to physical or economical constraints.
Most existing transportation policies reflect older social objectives and technologies. During the early years of the automobile age underpricing may have been justified to achieve economies of scale in vehicle and roadway production. Also, in the past it was more difficult to charge directly for parking and road use using mechanical fee collection, but new electronic charging techniques reduce transaction costs. It is now possible to reform policies and practices to reflect a mature, technologically sophisticated transportation market. Such a market places more emphasis on using existing capacity efficiently and serving diverse consumer needs.
Win-Win Solutions are not widely implemented because most transport planning takes a relatively narrow, reductionist approach to problem solving. Win-Win Solutions tend to provide many modest benefits, but are not considered the best way to solve any major problem (Why Manage Transportation Demand?; Litman 2000). As a result, they are often overlooked, even if they are cost effective and could provide significant benefits.
Win-Win Solutions are often opposed by institutions that would need to change their practices. For example, insurance companies resist Pay-As-You-Drive pricing because it requires changing their current price structure. Municipal officials often oppose more Parking Management because they require additional analysis and management. In such situations the challenge is to develop rewards for institutions that improve their practices. For example, transportation funding can be based in part on achieving TDM objectives, and businesses can retain a portion of the savings that result when they encourage alternative modes.
Because Win-Win Solutions provide multiple benefits, they offer opportunities for cooperation and coordination between interest groups. People and organizations concerned with congestion, road and parking facility costs, road safety, economic development, consumer costs, environmental quality, community livability, and equity issues all have reasons to support these strategies. This creates the potential for broad political support. A first step toward implementation of Win-Win Solutions is to develop coalitions to support reform programs.
Specific Win-Win Solutions are described below. How much each is implemented depends on the circumstances. At a minimum they can be implemented to the degree that they provide direct economic benefits, such as reduced congestion, road and parking facility savings, reduced crashes, and consumer savings. Social and environmental benefits are therefore “free.” A greater level of implementation can be justified if social and environmental objectives are given significant value.
The petroleum industry benefits from various tax exemptions and government benefits. These include Petroleum Research and Development program funding, deductions on drilling costs and on oil wells, and royalty waivers on deep-water offshore drilling leases. The cost of programs to benefit petroleum producers and consumers, such as the Strategic Petroleum Reserve, could be charged directly to users through additional taxes or fees.